Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which of the following describes a revocable living trust?

1. The grantor retains control over the trust assets

2. The trust cannot be altered after creation

3. It is only effective after the grantor's death

4. The grantor loses all rights to the trust property

The correct answer is: The grantor retains control over the trust assets

A revocable living trust allows the grantor to retain control over the trust assets while they are alive. This means that the grantor has the ability to modify, revoke, or dissolve the trust at any time, as long as they are competent. This flexibility is a key feature of a revocable living trust, making it an appealing estate planning tool for individuals who want to maintain control over their assets and have the ability to make changes as their circumstances or intentions evolve. The other choices highlight characteristics that do not apply to a revocable living trust. For example, a revocable living trust can be altered after its creation, which directly counters the idea that it cannot be changed. Additionally, it is effective during the grantor's lifetime and can facilitate the management of their assets while they are still alive, rather than being solely effective after death. Finally, the grantor does not lose rights to the trust property, as they can use, manage, and benefit from those assets at any time, unlike irrevocable trusts where the grantor relinquishes control.