What is a Revocable Trust and Do I Need One?

To avoid probate court and streamline the wealth-transfer process for your heirs, a revocable trust (also known as a living trust) can be a valuable tool. It can help simplify the transition, as well as provide privacy.

Let’s face it, estate planning is not necessarily fun, but it is definitely critical, especially as you get older and acquire more assets. There is a preconceived notion, however, that it’s an activity only for the wealthy. That’s just not true. Everyone should have an estate plan in order to protect their loved ones after they die.

You have a few options to consider when creating an estate plan; for instance, should you create a will or a trust? For many, a revocable trust — or living trust — is a great option because of the benefits it provides.

A revocable trust is essentially a will replacement. Rather than directing assets toward the court system for probate administration (as is the case for wills), assets are directed to a private entity, called a trust. A revocable trust is just that; revocable. It can be amended anytime. Unlike an irrevocable trust, which generally cannot be revoked or amended, a revocable trust offers flexibility during the lifetime of the trust’s creator. Revocable trusts should not be confused with irrevocable trusts, which are generally used to remove assets (such as life insurance policies or shares of family businesses) from an estate, often for tax purposes.

The Ziploc Bag Metaphor

I like to use a Ziploc bag as a metaphor for a revocable trust when I discuss this option with my clients. Let’s say you have a resealable bag that remains open during your life. You can add property (by deeding real estate to your trust, for example), and you can remove property by selling it. This Ziploc bag is not a tax shelter, so any income or dividends your property earns will pass through and be taxed to you directly, and the assets inside are not immune to creditors.

You state who will get the contents of the bag upon your death, and you can change your mind at any time. When you die the Ziploc bag seals shut, and whatever property is in there must be distributed to your beneficiaries according to your instructions. That Ziploc bag is quite similar to how a revocable trust works. Of course, life and law aren’t as simple as a Ziploc bag, and like anything, revocable trusts have their advantages and disadvantages. Let’s look at both.


No Probate Court

Skipping the probate court process is one of the many benefits of a revocable trust. Probate is the administrative court proceeding where your personal representative is appointed and the payment of debts and distribution of assets is supervised, generally by a judge. Probate can be time consuming, cumbersome, public and quite expensive, which are reasons enough to want to avoid it.

By placing assets (such as a home, cabin or business interest) in a revocable trust, or by naming the trust as the beneficiary on non-probate accounts, such as life insurance or brokerage accounts, your assets will be distributed according to your wishes and will do so free from court supervision.

Avoid Conservatorship

Another great benefit a revocable trust provides is protection from going to court for control over your finances if you become mentally or physically incapacitated and incapable of taking care of yourself and/or your finances.

When you create a revocable trust with your spouse or partner, he or she has the authority over all the trust property. And, if you’ve made an individual trust, your successor trustee will step in and manage the trust property if you become incapacitated.


Revocable trusts are flexible, allowing you to make changes or amendments up until your death. Along with amending it, you can also name unrelated, out-of-town individuals to act as the administrator, something that can be cumbersome with a will.


A revocable trust is not made public upon your death, and your estate will be distributed in private.

Assets Available at Death

A revocable trust allows money to be available immediately after death. The trustee will be able to use the money to pay for estate taxes, administrative expenses and debts.


No tax benefits

Revocable trusts are not tax shelters and provide no tax benefits. What’s more, not every type of asset you own qualifies for inclusion in a revocable trust. Most notably, individual retirement accounts (IRAs) and other qualified retirement accounts cannot be placed into your trust (they must be owned by an individual). Trust planning for retirement accounts must be done very carefully; failure to do so can accelerate payments to beneficiaries and create adverse tax consequences.


You must retitle all of your assets that are to be held in the revocable trust. While this can be time consuming, it is the only way to reap the benefits of this type of trust. If you choose not to retitle an asset or you forget about one, it will fall outside the trust and will be handled separately.

Heirs have longer to contest a trust

If heirs want to contest a will, most states have specific statutes that dictate who can challenge a will and for how long. This time period can be as little as 30 to 90 days. If your heirs want to contest a revocable trust, however, they typically have longer than three months to do so. The time is subject to state-specific statutes of limitations, which are typically one to five years, but can be longer.

An Attorney’s Help

Is a revocable trust the right estate planning vehicle for you? The best way to determine the answer to that question is to speak with an estate planning attorney about your situation. Your attorney will help set up your estate properly in order to take care of the people you love once you are gone. And while it is no fun to think about planning for your passing, planning who will get your assets and how will give you — and your loved ones — peace of mind.

About the Author

Philip J. Ruce, J.D., LL.M.

Estate Planning Attorney, Stone Arch Law Office

Philip J. Ruce is a Minnesota estate planning attorney at Stone Arch Law Office, PLLC. Philip places a premium on a high level of client service and loyalty. Philip's trust and fiduciary research has been published by universities around the country. Philip is a graduate of the University of Minnesota (B.A.), William Mitchell College of Law (J.D.), and Thomas Jefferson School of Law (LL.M.). Philip is married with two children.

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