The trust is formed through the signing of a trust agreement that contains all of the needed provisions detailing how the trust's property is to be managed and distributed both during and after your lifetime.
A revocable living trust includes three parties: the grantor, the trustee and the beneficiaries.
The grantor establishes the trust and funds the trust through appropriate transfer documents and forms.
The trustee is the person or entity with the legal right to manage the trust's assets and distribute them to the proper beneficiaries.
The beneficiaries are the people and entities that benefit from and receive the trust's income and assets.
The grantor is usually both the trustee and the beneficiary of their trust during their lifetime. Doing so means you will have full control of the trust's assets and continue to make all decisions regarding the investment, purchase and sale of those assets. You also have full access to the trust's assets and associated income for your living expenses.
The trustee has a fiduciary duty to the beneficiaries that requires the highest level of care and faithfulness in the performance of those duties for the benefit of the trust's beneficiaries.
An additional benefit of the revocable trust is that you appoint the successor trustee, who may be a person you trust and feel comfortable with or a financial institution that has a trust department. If you should die or become incapacitated, your revocable trust will survive, and the successor trustee will have the authority to make decisions on your behalf in accordance with the terms of your trust.
