What is a living trust?
A Living Trust is a legal document that, just like a Will, contains your instructions for what you want to happen to your assets when you die. (“who, gets what, and when”). But, unlike a Will, a Living Trust avoids probate at death, and prevents the court from controlling your assets at your incapacity or your death.
A living trust is an estate planning tool that allows you to retain control over the trust property while you are still living, avoid guardianship in case you become incapacitated and can no longer handle your own financial affairs, and also allows you to pass trust property outside of probate when you die.
A “living” or “inter vivos” trust is one that is set up and funded while the grantor is alive. In most cases, the grantor names his or her self as both trustee and beneficiary. In a joint trust scenario, both husband and wife are co-trustees as well as co-beneficiaries while both remain living. A living trust can be modified or revoked as long as the settlor (or settlors in the case of a joint trust) are living. A living trust should not be confused with a “testamentary trust.” A testamentary trust comes into being under the terms of a will, typically for the care of a minor child, and opens only after the grantor’s death.
The “living trust” described in this brochure is a revocable living trust. It is sometimes referred to as a revocable inter vivos trust, or a grantor trust. A living trust may be amended or revoked by the person creating it (commonly known as a “trustor,” “grantor” or “settlor”), at any time during the trustor’s lifetime, as long as the trustor is competent. A trust is a written legal agreement between the individual creating the trust and the person or institution named to manage the assets held in the trust (the “trustee.”) In many cases, it is appropriate for you to be the initial trustee of your living trust, until management assistance is anticipated or required.
A living trust is a written declaration and contract in which you state that you (as “grantor”) are transferring your property into living trust for the benefit of yourself during your lifetime (lifetime “beneficiary”) and then for the benefit of your heirs (remainder “beneficiaries”). You will be the “trustee” of your living trust which means that during your lifetime, you will have complete control over the living trust’s assets. The “successor trustee” you name will take control over your living trust in case of your death or incapacity. In addition, you will have the power to change, amend or revoke your living trust at any time during your lifetime.
