A TRUST IS A WRITTEN AGREEMENT that names someone to be responsible for managing property for the benefit of others. A revocable living trust (also called a “living trust” or “revocable trust”) is one type of trust.
IT’S A LIVING TRUST because you create it while you’re alive. It’s “revocable” because, as long as you’re mentally competent, you can change or end the trust at any time, for any reason. You need no one’s permission to do so. In Wisconsin, a trust is revocable only if it states so in the trust agreement. Usually a living trust becomes irrevocable (not open to changes) when you die.
A trust involves three parties:
- The settlor or grantor is you, the person who creates the trust.
- The trustee is the person who agrees to accept your property and manage it as the trust agreement directs. You can name more than one trustee, thus creating co-trustees who must act together.
- The beneficiaries are those who will receive the income from the property in the trust and, with your direction, the property itself.
How does a revocable living trust differ from a will and a living will?
BOTH A WILL AND A LIVING TRUST enable you to provide for your beneficiaries and direct how your property will be distributed after you die. With a living trust, you turn over some or all of your property to the trustee to manage while you’re alive. With a will, you keep your property and manage it yourself while you’re alive. A living trust also lets you do something a will can’t do: Spell out how you want your property managed if you become disabled during your lifetime. Finally, a living will is a completely different type of document. In it you state your preferences about life-prolonging medical treatment and procedures.