1. Settlor. The Settlor is essential to a Revocable Living Trust. The Settlor executes the Trust and contributes property. The Settlor also holds the power to modify and revoke the Trust. The Settlor selects the Trustee and Successor Trustee(s) and determines how Trust property will be distributed at the Settlor’s death.
2. Intent. A Settlor must have the intent to create a Trust (Probate Code §15201). No particular words are required to show intent. The Settlor, however, must show the intent to manage Trust assets separately from his/her own assets. For this reason, and others, all Trust assets should be held in the name of the Settlor “as Trustee.”
3. Trust Property. A valid Trust requires the Settlor to transfer a present interest in property to the Trust. Trust property can be tangible, such as a home, or it may be intangible, such as a copyright interest. Most people will include all Probate assets in their Revocable Living Trust, including all real property, bank accounts, stocks, bonds, and investments.
4. Trust Beneficiary. A Trust must have a reasonably ascertainable beneficiary or class of beneficiaries (Probate Code § 15205(b)(1). During the Settlor’s lifetime, the Settlor is the primary beneficiary. After the Settlor’s death, Trust assets are distributed to the beneficiaries named in the document. Should all Trust beneficiaries predecease the Settlor, most documents will provide for Trust assets to be distributed to the Settlor’s intestate heirs.
5. Valid Trust Purpose. Trusts must have a purpose that is neither illegal nor against public policy. Trusts encouraging divorce, for example, are against public policy. Revocable Living Trusts will often include a severability clause. In the event the Court invalidates a provision of the Trust, the severability clause allows the remaining provisions remain enforceable.