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Your Guide to Revocable living trusts: Advantages and Disadvantages

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Your Guide to Revocable living trusts: Advantages and Disadvantages

Considering all the puzzling legalities and complex tax concepts, estate planning is indeed a daunting task. But with the correct expert guidance, a revocable living trust can actually nail this task and gain prospective benefits. Revocable living trust, or living trust in the dynamic world of today, has become a pivotal tool for many families in terms of investment and business for the sake of a prosperous future.

As we move forward, we’ll explain to you the nooks and crannies of a revocable living trust, its advantages and disadvantages, and shed some light on its tax intricacies.

What does the term ‘Revocable Living Trust’ define?

The term revocable living trust, which is widely also known as inter vivos trust, is such a document that gives the grantor the legal right to transfer full or part of their assets to the trust, to whom they may be entitled. From thereon, the grantor then appoints himself or a third party for the management of the transferred assets, which will be beneficial for both parties involved.

List down some Potential Features of Revocable Living Trust:

The potential features of a revocable trust are listed below:

Unlike irrevocable trusts, you still have full ownership of the trust until you pass away. With ownership in hand, you have the full right to either amend or revoke trust at any time as per your wish.

You or the grantor, being the initial trustee, owes the initial right to asset management as per your own benefit. You can therefore contribute to making sound business, investment, or mutually shared decisions. 

During your lifetime, you can choose or assign a successor trustee who will take care of your assets after your demise. 

You can add the names of the beneficiaries who will be inheriting your trust assets upon your demise. 

Tax Considerations for Revocable Living Trusts:

Absence of Lifetime Tax Benefits:

Whenever you retain control and possession of the assets, they will be considered a part of your estate and therefore taxable.

Income Tax: 

The income generated and earned on the trust assets shall be taxed as per the donor’s tax bracket. 

Estate Tax:

Assets transferred and donated to estate are subject to be taxed as per estate’s law and it depends upon the real value of the estate.


Smooth Distribution:

This will avoid further scrutiny and confirm a streamlined and faster distribution of assets to the beneficiary.

Incapacity Planning:

This gives you a sense of relief in the sense that your assets will be managed and controlled in case you become incapacitated.


This keeps your entire detail or estate plan confidential, thus assuring you that your privacy is properly reserved and retained at all times.


With greater flexibility in the area of revocable living trusts, you (the grantor) have an opportunity to control the distribution of assets compared to a will. 


Significant Costs: 

The setup and legal costs of maintaining a trust can be substantial. 


Skilled staff may be required to manage the record of trust assets.

Tax Implications: 

Tax benefits cannot be utilized during your lifetime.


A revocable living trust, unlike any other trust, is one of the very beneficial estate planning tools that lets you keep assets in your name. From seamless asset distribution to avoiding probate, a revocable living trust offers tremendous benefits and flexibility to the host. 

Although there are certain tax implications that might be carefully evaluated, there are countless advantages to considering a revocable living trust for personal gains. By seeking assistance from expert CPA professionals like, you can clearly safeguard your legacy and ensure your wishes are carried out without being penalized or heftily charged. 

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