Estate Planning Basics – Revocable Living Trust

    Published: 06-16-2009
    Views: 10,603
    Attorney Mike Collins discusses how to put an estate plan into place, including setting up a revocable living trust.

    Michael T. Collins: This is Estate Planning Attorney, Mike Collins of The Collins Firm. Today we are going to talk about one of those basic strategies that so many attorneys would use today to address all of the basic elements of your personal estate plan. I am talking here about the Revocable Living Trust. To understand trust, how it works, why it works, you only need to grasp one basic principle of our law. The asset you want to have two kinds of title associated with them, your first, called legal title. Legal title refers to a registered ownership, the name on the deed. There is a second kind of title that's sort of in the mind of the law that you may not be familiar with, equitable title. Equitable title refers to the person or persons who have the right to use the asset. Legal title and equitable title are in the same person or persons. When we establish a trust, all that we do, and this is all, is that we separate the two titles. So now you can see each one of them. We take that legal title when we place in the name of someone called the trustee, but the trustee's ownership is of a highly qualified kind because he or she or they can only do with that asset, what you, the original owner said they could do in that trust document. So when you establish a trust there are three roles involved, there's the original owner or owners, the ones who have set up the trust, we call them the trustor. There is going to be the trustee who is going to be in charge of managing the trust, whose name is going to go on all the deeds and the accounts, he is going to have legal title, and there are the equitable owners of the trust assets. When somebody dies, they can't manage for themselves. The legal system at that point is only really focused on his legal title; a Trust is just your set of instructions. Your estate planning attorney will give you all of the instructions you need to do that. Nothing else changes in your life. The benefit of the trust, the significance of the trust, only arises when the need arises, you can't manage for yourself, you die and then your designated successor, your decision-maker steps into your shoes, picks up your instructions and carries out your wishes. That's what a trust is about. It's not for everybody, but it's not for just the wealthy. So many middle-class Americans have resorted to a revocable living trust. There's a reason for this. You want to consider one tool in most circumstances. I urge you to talk to your estate planning attorney and see whether this makes sense in your case.