RLT stands for Revocable Living Trust.
Understanding a Revocable Living Trust
A Revocable Living Trust (RLT) is a specific type of trust that an individual establishes during their lifetime. Its defining characteristic is its "revocable" nature, which means the creator retains the ability to modify, amend, or even completely terminate the trust at any time, provided they are not incapacitated or have not passed away.
This flexibility makes an RLT a widely utilized tool in estate planning, allowing individuals to maintain control over their assets while alive and ensure they are managed and distributed according to their wishes.
Other Common Names for an RLT
While "Revocable Living Trust" is the full and precise term, this type of trust is often referred to by several other names that highlight its key features:
- Revocable Trust: This emphasizes the creator's retained power to alter or cancel the trust.
- Inter Vivos Trust: A Latin phrase meaning "between the living," indicating that the trust is created and becomes effective during the grantor's lifetime.
- Living Trust: This name focuses on the fact that the trust is established and operates while the creator is still alive.
Key Features of a Revocable Living Trust
Here are the primary characteristics that define an RLT and contribute to its role in personal financial and estate planning:
- Established During Lifetime: Unlike a will, which takes effect upon death, an RLT is created and typically funded with assets while the grantor is alive.
- Adaptable and Changeable: The grantor has the complete freedom to make changes to the trust document, its beneficiaries, or the assets held within it, reflecting evolving life circumstances or intentions.
- Asset Management and Control: Assets placed into the trust can be managed by a designated trustee (often the grantor initially) for the benefit of specified beneficiaries, maintaining privacy and control.
- Estate Planning Solution: RLTs are frequently used to streamline the transfer of assets upon death, potentially allowing the estate to avoid the often lengthy and public probate court process.
