What is a living trust?
A living trust allows you to gather together all of your significant property in one document. This is important if you want to make sure your property is distributed easily and quickly after your death. The trust, not you, owns the property. This doesn’t mean that you no longer have control of your assets. Since you, the grantor, will usually appoint yourself as the trust’s initial trustee, you still have complete control of your property. You can do what you want with the property; you can even transfer property out of the trust or add property to it. Most importantly, a living trust allows you to provide for the quick and efficient distribution of your property to loved ones when you die.
A trust is an arrangement under which one individual, called a trustee, holds legal title to property for another individual, called a beneficiary. You can be the trustee of your own living trust and keep full control over all property held in trust. The “living trust” (also called an “inter vivos” trust by lawyers who just can’t give up Latin) is simply a trust you create while you’re alive, rather than one that is created upon your death, under the terms of your will.
Most of us share the same objectives for our estate plan: 1) Provide for our spouse or dependent children; 2) distribute our property; 3) plan for our disability; 4) organize our finances; and 5) reduce our estate taxes. Unfortunately, most of us fail to put together a plan that achieves these goals. There are many approaches that can be used; some are relatively simple, while others are quite complex. The choice of the right plan for your situation requires careful consideration after receiving qualified professional advice. This pamphlet attempts to answer your questions about one of the most popular estate planning alternatives: the revocable living trust. The answers to these questions will give you a general overview of the advantages and disadvantages of using a living trust as your primary estate planning document.
A living trust is a contract that allows you to transfer ownership of your property from your individual name to your name as trustee of your trust, so that all of your assets are “owned” by the trust. A revocable living trust is completely amendable, and as the creator and trustee of the trust, you have absolute control of the property in the trust during your life and capacity. Nothing changes except the name on the title to your property. A trust allows your family to privately administer and distribute your assets upon your death in the most economic and efficient manner. A trust can also be crafted to serve a particular purpose and provide certain benefits depending on your unique situation, assets and goals. For example, a trust is capable of but not limited to: • Providing for the care of a handicapped child (Special Needs Trust); • Preventing taxation of life insurance proceeds in your estate (Irrevocable Life Insurance Trust); • Allowing married couples to take full advantage
A living trust, also called an inter vivos trust, is a trust which becomes effective during the lifetime of the person who created the trust. The person who created the living trust, called the creator, may change the terms of the living trust during his or her lifetime. Because a living trust typically contains instructions for managing trust assets during the creator’s lifetime as well as instructions for distributing trust assets upon the creator’s incapacity or after his or her death, a living trust usually eliminates the need for conservatorship or probate proceedings.
