A Revocable Trust is a Will Substitute. It functions like a Will, with many added features.
A Will states who receives your property when you die. A Revocable Trust not only states who receives your property, but also when, where, how, and why they receive it
For example, a Revocable Trust can provide that your assets are to be used for the medical needs of a sick relative, the educational expenses of your college aged children, or the living expenses of your surviving spouse. It can state that your children will receive outright distributions upon reaching a certain age, or that their inheritance will remain protected in the trust throughout their lifetimes. The possibilities are only limited by your own creativity.
If your Revocable Trust includes Spendthrift Provisions, then any assets in the trust after your death are protected from your beneficiaries’ creditors. If your children are sued, divorced, or facing financial difficulty, the Trustee can spend money on their behalf, without jeopardizing the money by giving it to the beneficiary directly. This is particularly important for families with small children, because absent a trust, they would receive full access to their inheritance upon their eighteenth birthday. Suffice it to say, eighteen-year-olds do not manage money wisely.
Because you are free to revoke or amend the trust at any time, it is considered a Grantor Trust for tax purposes. This means that you do not have to file your taxes any differently than before you established the trust. During your lifetime, you have full access to the entirety of the trust, and you can change it at any time.