Revocable living trust (RLT)
The grantor's main during-life vehicle: holds titled assets, names successor trustee for incapacity, and at death often splits into sub-trusts (bypass, QTIP, children's trusts) per a formula in the instrument. Does not by itself reduce estate tax.
| Facet | Detail |
|---|---|
| Also called | Living trust, revocable trust, inter vivos revocable trust |
| A-B / A-B-C role | Parent document — sub-trusts spring from it at first death |
| When created | During grantor's life; funded by retitling assets |
| Revocable | Yes — grantor may amend or revoke |
| Inter vivos / testamentary | Inter vivos |
| Typical beneficiaries | Grantor during life; spouse and descendants after death per plan |
| Primary purpose | Probate avoidance, incapacity continuity, container for tax sub-trusts |
| Marital deduction | N/A while grantor alive; sub-trusts may qualify at death |
| Uses estate exclusion | No while revocable; bypass sub-trust uses exclusion at first death |
| In survivor's estate | Grantor's share still in estate; survivor's own revocable share remains in survivor's estate |
| Basis step-up | At each owner's death on assets in the trust |
| Income tax | Grantor trust — income on grantor's Form 1040 |
| Crummey powers | No |
| GST / dynasty | May hold GST-exempt sub-trusts if drafted |
| Spendthrift | Limited while revocable; stronger in irrevocable sub-trusts at death |
| See-through (IRA) | Poor IRA beneficiary — often accelerates payout; prefer individuals or conduit |
| Key tradeoff | Privacy and control vs must fund and maintain; no estate tax savings alone |
See wills-and-pour-over.md.