TYPICAL REVOCABLE INTER VIVOS TRUST

As previously indicated, an Inter Vivos Trust might be created to provide a quicker and cheaper method of transferring assets than the probate court process associated with a Will. Because such a trust is often used as a "will substitute", the trust is usually "revocable" so that the settlor can change the terms up until his death. A typical trust of this type would work as follows:

An owner (settlor) transfers property to a trustee to be managed for the benefit of a beneficiary. In a trust set up to avoid probate, the settlor often transfers property to himself as trustee to be managed for himself as a beneficiary.

The agreement provides for the trustee to pay the settlor all the income from the trust during the settlor's lifetime together with such other amounts as the settlor may request. The instrument also provides that the settlor can amend or revoke the trust or change the trustee at any time.

Typically, the settlor names himself as trustee during his lifetime and then names his spouse, child, advisor (attorney or accountant), or institution (bank or trust company) as trustee on his death. A settlor acting as trustee can change the assets held in the trust whenever he wishes. He can buy new assets, sell or give away old assets and receive new assets into the trust. Married couples often utilize a single revocable trust for all their assets, separately scheduling community property and separate property; typically, both spouses serve as co-trustees of these revocable trusts until one spouse dies or becomes incompetent.