Which statement about revocable living trusts is true?

Which statement about revocable living trusts is true?

• A. They are private arrangements between the trustee and grantor.
• B. They require court reporting and involvement.
• C. They avoid estate taxation.
• D. They are tax savings vehicles.

Answer: (A)

Revocable living trusts center on privacy and control. A grantor transfers assets into a trust, names a trustee, and keeps the power to modify or revoke the trust during life. Because the trust is a private agreement and assets pass outside of the public probate process, its terms and holdings remain private between the trustee and grantor. This privacy is why the statement is true: the arrangement stays between the trustee and grantor and doesn’t become public record. It also means ongoing court involvement is minimized after death, since distributions follow the trust’s terms rather than a court-supervised process. However, revocable living trusts don’t provide tax savings and don’t guarantee estate tax avoidance; the grantor typically remains treated as the owner for tax purposes, so taxes hinge on the overall estate rather than the trust itself.

Revocable living trusts center on privacy and control. A grantor transfers assets into a trust, names a trustee, and keeps the power to modify or revoke the trust during life. Because the trust is a private agreement and assets pass outside of the public probate process, its terms and holdings remain private between the trustee and grantor. This privacy is why the statement is true: the arrangement stays between the trustee and grantor and doesn’t become public record. It also means ongoing court involvement is minimized after death, since distributions follow the trust’s terms rather than a court-supervised process. However, revocable living trusts don’t provide tax savings and don’t guarantee estate tax avoidance; the grantor typically remains treated as the owner for tax purposes, so taxes hinge on the overall estate rather than the trust itself.