Estate Planning - What is a Revocable Living Trust?
What Is a Revocable Living Trust?
A revocable living trust is a legal arrangement where you:
-
Create the trust (as the Grantor)
-
Manage the trust (as the Trustee)
-
Benefit from the trust (as the Beneficiary)
Because the trust is “revocable,” you can change it, amend it, or revoke it entirely at any time, as long as you're alive and competent.
How It Works
You transfer ownership of your assets from yourself individually to yourself as trustee of your trust. This process is called funding the trust. After funding, the trust, not you, legally owns the assets, but you retain full control.
You can still:
-
Buy and sell assets
-
Access your accounts
-
Use property as you wish
-
Borrow against trust-owned assets
Why Funding Matters
For your trust to avoid probate, your assets must be formally transferred into the trust. If an asset isn’t funded — meaning ownership isn’t updated — it may still go through probate.
Important: Assets like IRAs, 401(k)s, and 403(b)s should remain in your name individually for income tax reasons. To avoid probate, name your beneficiaries directly on those accounts. You should also consult with a tax or financial advisor when funding your trust.
What Happens When You Pass Away
Because your trust owns the assets, you don’t legally “own” anything at the time of your death. This avoids probate entirely. Your successor trustee steps in and administers the trust according to your instructions, privately and without court involvement.
Your successor trustee must be of legal age and is bound by fiduciary duty to act prudently and follow the terms of the trust.
Typical Documents Included in Your Estate Plan
-
Revocable Living Trust – The main estate planning document
-
Certification of Trust – Used to transfer assets into your trust
-
Pour-Over Will – Catches any unfunded assets and moves them into the trust
-
Comprehensive Transfer Form – Covers untitled personal property
-
Community Property Agreement – For clients in community property states
-
Schedule of Assets – Lists your trust-owned property
-
Personal Letter of Direction – Shares personal wishes and guidance
-
Powers of Attorney – Financial and healthcare authority documents
Each document plays a specific role in making sure your plan is complete, functional, and legally sound.
Who’s Involved in a Revocable Living Trust
A revocable trust involves several legal roles, some you take on yourself, and others you assign to people you trust. Here’s a breakdown of each:
Grantor
You are the Grantor, the person who creates the trust and sets the rules. As Grantor, you decide how the trust works, who manages it, and who benefits from it.
Trustee
You’re also the Trustee while you’re living. That means you manage the trust’s assets, make financial decisions, and maintain full control. You can buy, sell, borrow, and use assets the trust owns, just as you did before funding the trust.
Beneficiary
During your lifetime, you’re the Beneficiary too. The trust exists for your benefit, giving you access to your assets and any income they generate.
Successor Trustee
This is the person you name to step in when you can’t serve as Trustee, typically due to death or incapacity. The Successor Trustee takes over management of the trust and is legally required to follow your instructions and act in the best interest of your beneficiaries.
Guardian
If you have minor children, you name a Guardian in your Will (not your trust). The Guardian is responsible for their care if something happens to you, including their support, education, and well-being. Typically, a guardian must be 21 or older.
Agents (Powers of Attorney)
You also name Agents in your Powers of Attorney documents:
-
A Financial Agent to manage money and property if you become incapacitated.
-
A Healthcare Agent to make medical decisions on your behalf if you're unable to.
These roles only apply during your lifetime. Once you pass away, your trust and successor trustee take over.
Keeping It Updated
You can revise your trust at any time. If your life changes: through marriage, divorce, a new child, a move, or a major asset change, your trust should reflect that. Asset schedules can be updated without re-signing the trust.
Gibson Wealth Advisors is an independent, fee-only, fiduciary advisory firm that provides comprehensive financial planning, with a strong focus on retirement planning.
We coordinate tax planning and preparation, estate planning, investment management, and insurance consulting under one roof—helping you streamline your financial life with a comprehensive, integrated approach. We offer face-to-face meetings at our offices in Dallas, Allen, and Tyler, Texas, and serve clients nationwide via Zoom.