What is a revocable living trust?
A revocable living trust is simply method by which an individual (known as the “settlor” or “trustor”) may maintain his or her property for distribution to ascertainable beneficiaries through one or more other persons (known as the “trustee(s)”) when the settlor/trustor dies. It differs from a last will in that legal title to the property to be distributed (known as the trust estate) is transferred to one or more trustees while the settlor is alive, and then the successor trustee(s) distribute(s) the trust estate to the beneficiaries according to the instructions in the trust instrument when the settlor/trustor dies. This procedure avoids the cost, delay, and publicity of a distribution supervised by the probate court as with a last will. Generally, a living trust remains private even after the death of the settlor (unless, for example, its validity or a provision in it is questioned, in which case the probate court must determine the dispute). For these reasons, the living trust is by far the estate planning method of choice for most people to maintain their property while they’re living and to distribute it when they pass away.
Frequently, if not the overwhelming majority of the time, a living trust’s settlor is also the trustee during the settlor’s lifetime. Once the settlor/trustee passes away, the trust estate passes to the “successor trustee(s)” named in the trust document. If no successor trustee is named in the trust document, the probate court will appoint one. The successor trustee then distributes the trust estate according to the trust’s instructions.
Similar to the will being amendable during the testator’s lifetime but enforceable only on the testator’s death, the living trust is revocable or amendable at any time prior to the settlor’s death, but it becomes irrevocable when he or she passes away.
Failure to Properly Create a Living Trust
The failure to properly create the living trust is much the same as not properly executing a will: If no valid will exists, the property that was thought to be a part of the trust estate will be distributed to the decedent’s heirs in accordance with California law. If no heirs exist, the property escheats (i.e., ownership is transferred) to the State of California. If a valid will exists but the trust was not properly created the property that was thought to be part of the trust estate generally will be distributed via the will; otherwise, just as in the case where no valid will exists, the property will be distributed to the decedent’s heirs in accordance with California law. If no heirs exist, the property escheats to the State of California.
How to Revoke a Revocable Living Trust
Probate Code section 15401 provides the method by which a revocable living trust may be revoked, unless the trust instrument explicitly makes its language the exclusive method of revocation. For more on revocation, see Masry v. Masry (2008).