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What is a Revocable Family Trust?

What is a revocable family trust?

A revocable family trust, sometimes called a living trust, provides a way for one generation of relatives to pass along property without making a full-blown estate plan. The basic concept is that instead of creating a separate estate for each asset we wish to leave to our kids or grandkids, we can create a revocable family trust that can be changed or revoked at any time.

How does it work?

The revocable family trust creates a permanent replacement for any portion of an estate held by the deceased individual. The deceased individual’s estate is valued at his or her life expectancy plus 10 years, but no more.

In this way, assets can be distributed without worrying about heirs who may have changed their minds about what they want from their inheritance, or who might be too ill to receive it.

In some cases, revocable family trusts may not be appropriate for all assets. In that case, you should contact a lawyer to determine. how best you can distribute your assets with a revocable trust intact.

Estate planners & tax attorneys often recommend revocable trusts over will grants because it gives the final say in how an estate is administered.


The advantages of revocable family trusts are that they can be created for a wide range of reasons, including helping an ageing loved one obtain health care, allowing a child to remain in their home state after divorce, or even creating a trust to pass along to the next generation.

The procedure is relatively simple and comes with some benefits. You’ll need to fill out some paperwork and give some more thought to the details, but the end result is that you’ll be able to take care of important assets on your own while protecting the assets that matter most – your family’s future.


Revocable trusts have some disadvantages. Time and effort are required to establish a revocable family trust.

In order to ensure the trust’s objectives are being met, the grantor’s estate plan must be reviewed annually. As a result, revocable trusts are more costly to maintain than other estate planning instruments.

Revocable family trusts do not offer tax advantages to their grantors.
In order to designate which assets go into the revocable trust, the grantor must create a will. The beneficiaries for the remaining assets, to avoid probate. Creditors can still reach the property in a revocable trust during the grantor’s lifetime.

Myths about revocable:

There are these myths, people have about revocable family trusts. Revocable family trusts are not a magic fix to your tax problems. Just because you have a revocable trust doesn’t mean that you aren’t aware of how complicated and fragile your financial situation actually is.

You can still end up owing taxes even if you later decide to distribute your assets through a regular, legal complete, formal process.

When someone dies, a significant portion of his or her property passes to the person nominating the trust. One of the most common questions asked about revocable trusts is whether they can be used to avoid paying taxes.

The answer is yes, but only if you know what you are doing. The rules on tax avoidance are complex and many people misuse the process.