In past articles, we’ve covered some of the fundamentals of trusts and fiduciary services available to members through Frankenmuth Credit Union and Credit Union Trust. This article is based on questions from members. It is designed to broaden the understanding of trusts and how they can benefit members.

What is a Revocable Living Trust?
A trust is a legal entity created to hold ownership of a person’s assets. A trust that is created while a person is still alive is called a “living” trust. “Revocable” living trusts are “living” because they are made during one’s lifetime, and “revocable” because they can be changed as a person’s circumstances or wishes change.

A revocable living trust is often simply called a living trust. The person who forms the trust is called the “grantor.” A trustee is appointed and manages the assets placed in the trust for the benefit of one or more beneficiaries. At some point beneficiaries receive property held in the trust. A grantor can also be both the trustee and beneficiary of a living trust, and in that way can retain management control over the property placed into a trust.

How does a Revocable Living Trust work?
When a trust is created and a trustee is appointed, that person manages the assets in the trust. On the grantor’s death the trust becomes irrevocable, the terms of the trust cannot be changed, and beneficiaries are awarded assets held in the trust per the wishes of the grantor. On the death or incapacity of a grantor who is also the trustee and beneficiary, the duties and obligations of managing the trust shift to a successor trustee previously named by the grantor.