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Simple English definitions for legal terms
Revocable Trust
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A quick definition of Revocable Trust:
A revocable trust is a legal arrangement where someone (called the donor) transfers their belongings to someone else (called the trustee) to take care of them for someone else (called the beneficiary). The donor can change their mind and take back their belongings at any time. The beneficiary only gets the belongings after the donor dies. It's like a secret treasure chest that someone else takes care of until you're old enough to open it.
A more thorough explanation:
A revocable trust is a legal arrangement where the person creating the trust (the donor) transfers their assets to a trustee who manages the assets for the benefit of a beneficiary. The donor can change or cancel the trust at any time during their lifetime.
John creates a revocable trust and transfers his house, car, and savings account to the trust. He names his daughter, Sarah, as the beneficiary. John can still live in the house, drive the car, and use the money in the savings account. However, when John passes away, the assets in the trust will be transferred to Sarah.
Another example is if a person creates a revocable trust and names themselves as the trustee and beneficiary. They can manage their assets as they wish during their lifetime, but when they pass away, the assets will be transferred to their chosen beneficiaries.
These examples illustrate how a revocable trust allows the donor to maintain control over their assets during their lifetime while also ensuring that their beneficiaries receive the assets after their death.