What is the Difference: Living Will & Revocable Living Trust

11/6/2017

I have seen various definitions for what make a trust a “Living Trust,” Most of the time, one will simply defines a Living Trust as a trust made by the person who is called a Trustor or a Grantor during his or her lifetime.

However, by this definition, the a person’s Will should be called a Living Will since it too is made by the Testator (male) or Testatrix (female) during his or her lifetime. However, there is a different document that is rightly called a Living Will and it has nothing to do with a Last Will and Testament.

The Living Will, is also called a “Declaration as to Medical Treatment.” It is derived from Colorado Revised Statutes § 15-18-101and following. It is called The Colorado Medical Treatment Decision Act. Within this Act, § 15-18-104, is entitled, “Declaration as to Medical Treatment.” So, this document made by a living person who is stating his or her terms of treatment when two physicians certify in writing that the individual is in a terminal condition or a persistent state and lacks decisional capacity at this time to make the decision regarding termination of medical treatment. In essence, it is called the “Pull the Plug” document.

The Last Will and Testament – The Will – is the document in which the Testator says what should happen to his property at his death. It is made while the Testator is Living, but the transfer of property is not made until his death.

A “Living Trust” is made by the Trustor, while living, of course, but transfer of title to property placed in the Trust is made during the Trustor’s lifetime.

A Revocable Living Trust (RLT) is a Living Trust that can be revoked by the Trustor during his lifetime. At the Trustor’s death, the RLT becomes irrevocable unless there is a special provision in the Trust stating that the Trust will remain revocable after Trustor’s death. This same trust can be created in the Last Will and Testament, to take effect at death. In such case, it would be a testamentary trust, not a living trust.

An Irrevocable Trust is, of course, irrevocable. It can be a living trust or not. In other words, it can be created in the Will, in which it would the called a testamentary trust – formed to be effective by the Last Will and Testament.

So a trust can be revocable or irrevocable. It can be a living trust or a testamentary trust. A living trust that is revocable is called a Revocable Living Trust.

© 2016 DOUGLAS S. HOLDEN, P.C. All Rights Reserved

2 Comments

Zachary Tomlinson link

1/31/2021 06:36:52 pm

I had no idea that revocable living trusts can are people that you can trust and change anytime within your lifetime, until your passing. I have a relative who's trying to plan this out because of this pandemic. I hope he'd consider reaching to a probate expert as an option for his assets.

Douglas S. Holden link

2/1/2021 08:58:26 am

Hi, Zachary. Thank you for the post. I meet with many people whose estate plan is done by self-help. Actually, I have no problem with that so long as these folks actually learn the topic rather than just grabbing a form online and using it.

I don't want to disparage anyone who goes the self-help route or those who have websites from which canned forms are sold to the public. I have reviewed many of these forms and I have been involved with them in probate. My conclusion is that some work out fine and others do not.

I know cost is a real concern, but unfortunately, note the old saying, "You get what you pay for." When I am doing seminars I usually give the following analogy:

"Your car breaks down right before the big family vacation. You take it to a mechanic who looks it over and tells you he can fix it for a million dollars. So you decide you don't need to spend that much so you do it yourself. Lo and behold, the car works, so you all take off down the highway - and the car breaks down. You have the car towed to the mechanic who does the job, but unfortunately, it is too late to take your vacation."

The moral to this story is that once one passes away (and even sometimes before that) it is too late to make changes. You have to deal with the consequences Sometimes that may not be a big task, but sometimes it is.

Talk with a professional. Preferably someone who specializes. Often attorneys who dabble cannot do an adequate job. When I was young and dumb, I told clients that I specialized in whatever work came in. Unfortunately, as I look back, that was an awful thing to do. I love that I specialize.

Remember, you are the boss - the employer. Interview the professional. Find someone with whom you are compatible and someone you like and who can answer your questions. Someone who will take time with you. I think there is no substitute for looking a client in the eye and understanding exactly what the client wants.

Costs are important. I tell people that I am not the cheapest guy in town, but neither am I the most expensive. Just remember how important this is and how expensive it can be if not done properly.

Best regards,

Doug
(303) 888.8183 (Cell)

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What is the Difference: Living Will & Revocable Living Trust

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