Listen to a Business English Dialogue About Revocable trust
Emily: Hi Juan, have you heard about revocable trusts in finance? I’ve seen the term, but I’m not entirely sure what they are.
Juan: Hey Emily, a revocable trust is a legal arrangement where assets are transferred to a trustee to be managed for the benefit of the trust’s beneficiaries during the grantor’s lifetime. Unlike irrevocable trusts, revocable trusts can be modified or revoked by the grantor at any time.
Emily: Oh, I see. How do revocable trusts differ from other types of trusts?
Juan: Revocable trusts differ from irrevocable trusts in that the grantor retains control over the assets and can make changes to the trust terms or dissolve the trust altogether. They’re often used for estate planning purposes to avoid probate and ensure smooth asset distribution.
Emily: That makes sense. What are some common reasons for setting up a revocable trust?
Juan: Some common reasons for setting up a revocable trust include avoiding probate, maintaining privacy in asset distribution, and providing for the management of assets in the event of incapacity. It can also help streamline the transfer of assets to beneficiaries after the grantor’s death.
Emily: Got it. How are assets transferred into a revocable trust?
Juan: Assets are transferred into a revocable trust through a process called funding, where the grantor re-titles assets in the name of the trust or designates the trust as the beneficiary of certain assets. This ensures that the assets are held by the trust and governed by its terms.
Emily: Thanks for explaining, Juan. It’s helpful to understand how revocable trusts work and their benefits for estate planning.
Juan: You’re welcome, Emily. Revocable trusts can be a valuable tool for individuals looking to manage their assets and plan for the distribution of their estate. If you have any more questions, feel free to ask!