What is a revocable trust?
A revocable trust is used for estate planning because it allows a transfer of assets to someone during a person’s life (a transfer after death would happen through a will). The assets become the legal property of a trustee, who is supposed to manage them and carry out the wishes of the person creating the trust, the settlor. The trustee is not supposed to profit from the trust; those profits need to go to the beneficiaries (though the trustee could be paid for his or her services).
Sometimes, people name themselves as the trustee and thereby maintain control of their assets during their lifetime. A successor trustee can be named to manage the trust’s assets if the trustee becomes unable to do so.
The settlor can revoke or change the trust at any time. After the settlor dies, the trust becomes irrevocable and cannot be changed or ended, unless the trust language provides for that or if there are no more assets in the trust.
A revocable trust can be challenged by a beneficiary under certain circumstances. The settlor’s mental capacity at the time the trust was created might be challenged. California law requires evidence of a deficit in mental functions, such as alertness and attention, information processing and thought processes.
Also, a trustee might be challenged as unfit to administer the trust. Someone who is not named as a beneficiary to the trust might challenge it, just as individuals cut out of a will contest that document.
Contact OC Wills & Trust Attorneys today at (949)347-5256 to learn whether a revocable trust is right for your estate plan. Brian Chew has more than 20 years of experience with trusts administration and can provide you the sound advice you need when devising a plan to protect your assets and provide for your heirs.