The name of the revocable trust
is fairly descriptive of its legal character. As opposed to a testamentary trust
, or a trust created by will, the revocable living trust
is, first, an inter vivos trust, meaning a trust that a person creates during his or her lifetime. The typical Illinois estate planning
living trust is testamentary in nature, meaning that it is the instrument by which the creator of the trust disposes of property at death. At death, the living trust (still in existence for a deceased client) acts, looks, and feels like a last will and testament
Generally, an estate planning trust is revocable, meaning that the creator of the trust, typically called the “settlor,” “trustor” or “grantor,” reserves to himself or herself the right to amend or revoke the trust at any time during his or her lifetime. The term “revocable trust” will refer to a trust created while the grantor is alive in which the right to revoke is retained by the grantor alone or can be exercised in conjunction with the grantor or solely by another with the authorization of the grantor. It is clear that without an express retained power to revoke the trust, a trust created during the lifetime of a person will be irrevocable. The transfer of property or assets to a revocable trust is not a gift because the right to revoke makes the transfer incomplete for transfer tax purposes. At death, the revocable trust becomes irrevocable (just as a will is irrevocable at death), and assets contained in the revocable trust will be included in the taxable estate of the grantor at death. Note that even though assets in the trust will not be included in the grantor’s probate estate, the assets will be included in the grantor’s taxable estate.