If you have a will you may wonder why you should bother with a revocable living trust. You might not know what it is, how it differs from a will or why you should care.

A will is a document that states who will get what when you die. It goes into effect after your death. It can stipulate who you want as legal guardians for your children in the event both you and their other parent die before they reach legal age.

A will requires probate. Probate is a court procedure in which a judge must decide it if is valid. That could be a lengthy, and costly, process.

A revocable living trust goes into effect as soon as you set it up. Broken down, the term revocable means that you can change it if you want to. Living means that it goes into effect while you are still living. Trust is just what the document is called.

There are some other terms you should be familiar with. You, as the person who sets up the trust, are referred to as the Grantor. The person who decides what happens to the assets in the trust is called the Trustee. The Successor Trustee is the person who would take over control of the asset if the Trustee dies.

The person who benefits from the assets in the trust is called the Beneficiary. A Successor Beneficiary is someone who will get control of whatever is left in the trust after the Beneficiary dies.

So now you know what it means, but what exactly does it do? Basically, it takes over the title, meaning ownership, of everything you put into it. If you put nothing into it, it is empty and therefore, pointless.

You will want to sit down with your attorney and go over any assets you may want to transfer to the trust. You will have to remove your name from title to any assets, and replace it with the name of the trust. Some things you may want to consider are any savings accounts, real estate and stocks and bonds. You probably won't want to include any retirement savings like a 401(k) or IRA.

That sounds like a scary thing to do, but it's not. As the grantor, the creator of the trust, you will make yourself the trustee: you will still be the one making all the decisions about your assets. You will also be the beneficiary: the one who benefits from the assets of the trust.

So why go through all the trouble and expense to set up a revocable living trust? The main reason is that when you die, the owner of all of your assets has not died. The trust owns your assets, not you. Control of any assets left in the trust will be transferred to the successor beneficiary.

There is no probate necessary. The successor beneficiary will sign a deed transferring control to him or her. Since there is no probate, the courts will not get involved, making the process much quicker and less expensive. Your assets will not become a matter of public record.

A revocable living trust can be customized to accommodate complicated issues, such as children from multiple marriages, so you can be assured that all assets will go right where you want them to.

A simple revocable living trust does not generally have an effect on taxes. However, if you have a lot of valuable assets, you can set up a more complicated revocable living trust that could reduce the amount of estate tax that would be owed upon your death.

Called an AB Trust, it is designed for married couples with children. In a nutshell, it works like this. The spouses leave property to each other, in trust, for life. The children become beneficiaries, for life. While it saves the couple money, eventually somewhere down the line someone will be taxed on it.

A revocable living trust won't protect you from creditors. If a creditor sues you and wins, he can still go after any assets you have in the trust. If you die owing creditors, they can go after your successor beneficiary to sell any real estate to pay them back. Even though your assets are generally not a matter of public record, real estate is.

While a revocable living trust costs more to set up than a will, it is definitely something that makes a lot of sense. Consider the possibility that you need a will, and a living trust.

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