What is a living trust?
A trust generally, is an agreement where one person (the trustee) holds and manages property for another (the beneficiary). If you create a trust under your Will, it’s called a testamentary trust. If you create a trust while you’re alive, it’s called a living trust, sometimes called an inter vivos trust.
A living trust, also known as a revocable trust, revocable living trust, or inter vivos trust, is an alternative way to own property during your life and transfer property at your death. Living trusts have been prepared by lawyers for clients for many years. You can create a living trust during your lifetime by signing a legal document that directs how property transferred to the trust will be managed, when and to whom the income from the trust property will be paid, and to whom, when and how the trust property will be distributed when you die. A person setting up the trust is called either a settlor, grantor, or trustor of the trust, while the person to whom you transfer your property is called the trustee. The persons who will receive the income during your lifetime or who will receive the trust property after you death, are called the beneficiaries. You may be the settlor, a trustee, and a beneficiary, all at the same time. The property in the trust is called the trust principal, co
A Living Trust, or Revocable Inter-Vivo Trust, is a legal document that authorizes a named trustee to manage your assets for your benefit during your lifetime. It is possible to name yourself or your spouse as trustee. The living trust is often used to avoid or reduce the cost of probate and to provide continuing management of your assets in case you become incapacitated. In the case of a husband and wife, living trusts may be created to provide estate tax savings at their deaths.
A Living Trust is an effective way to provide lifetime and after-death property management and estate planning. When you set up a Living Trust, you are the Grantor; anyone you name within the Trust who will benefit from the assets in the Trust is a beneficiary. In addition to being the Grantor, you can also serve as your own Trustee (Original Trustee). As the Original Trustee, you can transfer legal ownership of your property to the Trust. While this can save your estate from estate taxes when you die, it does not alleviate your income tax obligations. Within a Living Trust you must provide the name of a Successor Trustee who will take over the management of the Trust if you die or become incapacitated. You don`t have to go through the court to appoint a successor trustee. After your death, your Successor Trustee either terminates the Trust and distributes the assets to the beneficiaries you named in the Trust, or he/she continues to maintain the Trust on behalf of your beneficiaries,
A living trust is a popular estate planning tool that lets you (1) retain control over the trust property while you are alive, (2) avoid guardianship in case you become incapacitated and can no longer handle your own financial affairs, and (3) pass trust property outside of probate when you die. Legally, a living trust is a separate entity that you create while you are living to “own” property, such as a house, boat, jewelry, or mutual funds. The trust is revocable, which means that you can make changes to it, or even end it, at any time. For example, you may want to remove certain property from the trust or change the beneficiaries. Or you may decide not to use the trust anymore because it no longer meets your needs. A living trust gives you the flexibility to do any of these things. However, you do pay a price for this flexibility. A living trust does not avoid estate or income taxes, nor does it protect your assets from potential creditors. A big advantage of the living trust is tha
