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A Revocable Trust, also called a “living trust” is an instrument or agreement creating a three parties’ relationship between a grantor or settlor, a trustee and one or multiple beneficiaries. The settlor or grantor of the trust is the person who contributed to the property and executed the trust instrument in order to convey his property by trust. The trustee is the individual who is “trusted” and “entrusted” by a grantor to take care of the property and assets to be held in trust and for the enjoyment, use, profit of a beneficiary or beneficiaries. Under New York Law, the settlor may simultaneously be the trustee and will therefore maintain control over the trust’s assets.
Often, a revocable trust will be used as a substitute to a testament via which a person’s entire property (all tangible or intangible property, real property, bank) will be transferred to the trust during the settlor’s life. Within the trust instrument itself, a provision shall set what happens upon the settlor’s death. Usually, a revocable trust will refer to a separate instrument called a “pourover will” which provides that any asset not fully or properly transferred to a trust prior to the settlor’s death will be transferred to the trust named in said pourover will upon the settlor’s death or distributed as per the terms of the trust referenced.
A revocable trust can be amended, changed or revoked during the lifetime of the settlor. Under New York Law, the grantor does not have to give motives when he or she decides to modify a revocable trust. Therefore, if the settlor changes his mind on distributions and gifts, he or he can easily amend the revocable trust.
Importantly, a revocable trust does not need to be admitted to probate. This means that the beneficiaries will avoid paying estate fees and avoid long proceedings with the Surrogate’s Court.