Revocable trust
A revocable trust is a trust that its settlor can revoke. For owners of businesses, real estate and private investments, the term describes an arrangement for holding property in a trust during the settlor's life, with a successor trustee able to manage or distribute trust property under the trust terms. The trust controls property it owns, so transferring property into it is part of the arrangement.
How it works
A revocable trust holds property transferred to it during the settlor's life. A common arrangement pairs the trust with a pour-over will, which directs remaining probate property to the trust at death.
Uniform Trust Code ยง 601 uses the capacity required to execute a will for a revocable trust.
Where it shows up for owners of businesses, real estate and private investments
A revocable trust can hold business interests, investment accounts or real estate when those assets are transferred into the trust.
State deed rules can name a trust as a beneficiary of a transfer-on-death deed. Missouri allows such a deed to transfer real property to a trust whether or not it is revocable. Minnesota allows a transfer-on-death deed to name the trustee of a revocable inter vivos trust as grantee beneficiary.
Points that are easy to confuse
A revocable trust and a will have different roles in the common arrangement described above. The trust holds property transferred to it, while a pour-over will directs remaining probate property to the trust at death.
Trust ownership does not itself establish that every asset is held by the trust. Practitioner experience describes the trust as controlling only assets it owns, which is why transfers or retitling are involved in funding it.
Georgia law provides that property of a revocable trust is subject to claims of the settlor's creditors during the settlor's lifetime. That rule is specific to Georgia.
Common questions
Does a revocable trust include property that remains outside it?
A revocable trust controls only assets it owns.
Can a transfer-on-death deed name a trust?
Missouri allows a transfer-on-death deed of real property to a trust whether or not the trust is revocable. Minnesota allows a deed to name the trustee of a revocable inter vivos trust as grantee beneficiary.