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Who owns the property in a revocable trust?
In this article, you’ll learn about:
Let’s dig in.
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Let’s look at what owning property in a revocable trust entails.
A revocable trust is a written agreement.
It holds and manages assets.
The person who makes it is called the grantor.
The grantor can change or cancel the trust at any time.
While alive, the grantor usually controls the assets.
When the grantor dies, the assets go to chosen people without court involvement.
The trust’s financial details get reported on the grantor’s taxes.
In short, it’s a tool for managing and passing on assets easily.
A revocable trust is a tool to manage and pass on assets.
Here’s how a revocable trust works:
In a revocable trust, the trust itself owns the property.
The person who created the trust, called the grantor, controls the property.
They can change or remove property from the trust at any time.
When the grantor dies, a chosen person, called the trustee, manages and distributes the property to named beneficiaries.
In simple terms, the trust holds the property, but the grantor controls it.
A trustee does not own the property held in a trust.
They are responsible for managing the assets in the trust for the beneficiaries.
The trust itself legally owns the property.
The trustee’s role is to act in the best interests of the beneficiary.
They must follow the instructions provided by the grantor when the trust was created.
The trustee has control over the property, but they do not have ownership of it.
What does it mean when a property is owned by a trust?
It means that the legal title and ownership of the property have been transferred from the grantor to the trust.
The trust itself holds the ownership.
And the property is managed and controlled by a trustee on behalf of the beneficiaries.
As a beneficiary, you can spend money from a revocable trust.
But only when the trustee distributes the funds to you according to the trust’s terms and conditions.
The trust may specify when, how, or under what conditions you can receive the funds.
As a trustee, you cannot spend the trust’s money for your own personal use.
The funds must be used:
Trustees have a fiduciary duty to:
The expenses that can be paid from a revocable trust depend on:
Expenses that can be paid from a revocable trust include:
In a family trust, the trust itself legally owns the assets.
The trust structure separates the control and management of the assets from their ownership.
The trustee is responsible for managing and protecting the assets.
But the trustee does not personally own them.
And beneficiaries do not own the assets.
At least, until they are distributed to them according to the trust’s terms.
A trustee can live in a trust property only if the trust’s terms and conditions allow for it.
And if it is in the best interests of the beneficiaries.
The trust document may specifically permit the trustee to live in the property.
This is usually if:
Here are other questions clients ask us about who owns the property in a revocable trust.
When the grantor of a revocable trust dies, the trust continues to operate according to the terms and conditions specified in the trust document.
Since the trust is revocable, the grantor’s death does not change or terminate the trust.
Here’s what typically happens to a revocable trust when the grantor dies:
In a revocable trust, the trust itself is responsible for paying property taxes.
The trustee is in charge of ensuring that property taxes are paid on time.
The funds used to pay these property taxes typically come from the trust’s assets.
These include:
It is the trustee’s duty to:
The grantor cannot modify or add assets to a revocable trust.
The primary characteristic of a revocable trust is that it cannot be changed or revoked.
There are certain circumstances where you can add assets to a revocable trust:
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