A revocable trust is a trust that can be modified or terminated during the grantor’s lifetime. This type of trust can be altered at any time during the grantor’s life and therefore it is considered a part of the grantor’s estate. It is subject to being taxed. Anything that is part of the trust cannot be passed on until after the grantor’s death. And, at that time the trust becomes irrevocable or unable to be altered.
People generally set up trusts to pass along their assets to their loved ones after their death. It is a way that the grantor can feel sure that the person that he or she set up the trust for it taken care of or properly looked after. Many people also set up these trusts in order to still be able to exert some control over the money and assets even after death. There are some children that may not have the capacity to handle the money and/or assets in a responsible way so this is a way to ensure that the money distribution is arranged in a way that makes the grantor feel more comfortable.
A revocable trust can be used in place of a will. This type of trust is faster and much more cost effective than a will. A will requires court supervision or the need to go through probate. This is a lengthy and expensive process, and if you set up a revocable trust you can avoid some of these issues.