Financial Word of the Day: Revocable Trust
- Larry Jones
- Jul 3
- 2 min read
Updated: Jul 4
When it comes to planning for the future, few tools offer as much flexibility and control as a revocable trust. But what exactly is it—and why should it matter to you?
Definition of a Revocable Trust
A revocable trust, sometimes called a living trust, is a legal arrangement where you place your assets (like your home, investments, or bank accounts) into a trust during your lifetime. You still get to control and use those assets while you’re alive. And because it’s revocable, you can change it, update it, or even cancel it entirely if your circumstances or intentions change.
In plain English? It’s like setting up a box where you put your stuff, but you still hold the keys.
Why Do People Use It?
The biggest draw of a revocable trust is avoiding probate. Probate is the long, public, and sometimes expensive court process that happens when someone passes away without proper estate planning. A revocable trust lets your assets pass directly to your beneficiaries without going through that hassle.
It also helps:
Keep your financial affairs private (unlike a will, which becomes public record).
Allow for quick transfer of assets after your death.
Set rules for how and when your assets are distributed (great if you have young kids, blended families, or beneficiaries who need some financial guardrails).
A Real-Life Example
Imagine this: Sarah wants her two children to inherit her home and investments but worries about probate delays and costs. She creates a revocable trust and transfers her home and brokerage account into it.
During her lifetime, she’s still free to sell the home, change investments, or modify her trust. When Sarah passes away, her kids receive the assets directly through the trust—no probate court, no drawn-out process, and no one peeking into her family’s business.
Things to Keep in Mind
Before you rush to call a lawyer, remember:
A revocable trust doesn’t protect your assets from creditors or lawsuits during your lifetime.
It doesn’t save on estate taxes for very large estates (other strategies handle that).
You still need a pour-over will as a safety net to catch assets not placed in the trust.
Think of a revocable trust as a flexible tool—not a magic wand.
Talk Money Smarter
Next time you’re in a conversation about estate planning, try saying:"We’re actually setting up a revocable trust to avoid probate and make things easier for our kids."
That’s a savvy move—and now you know why.
Bottom line: A revocable trust gives you control today and simplifies life for your loved ones tomorrow. It’s one of the most practical steps you can take toward a smooth financial legacy.
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