What is a living trust?
A. A living trust is a trust established during a person’s lifetime in which a person’s assets and property are placed within the trust, usually for the purpose of estate planning. The trust then owns and manages the property held by the trust through a trustee for the benefit of named beneficiary, usually the creator of the trust (settler). The settler, trustee and beneficiary may all be the same person. In this way, a person may set up a trust with his or her own assets and maintain complete control and management of the assets by acting as his or her own trustee. Upon the death of the person who created the trust, the property of the trust does not go through probate proceedings, but rather passes according to provisions of the trust as set up by the creator of the 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. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and prevents the court from controlling your assets at incapacity.
A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust. A “living trust” (also called an “inter vivos” trust) is simply a trust you create while you’re alive, rather than one that is created at your death under the terms of your will. A living trust, unlike a will, offers people a fast, private, probate-free way to transfer one’s property after death. Different kinds of living trusts can help you avoid probate or set up long-term property management.
A Living Trust can be used to hold legal title to your assets and provide a mechanism to manage them. You (and your spouse) are the trustee(s) and beneficiaries of your trust during your lifetime. You also designate successor trustees to carry out your instructions as you have provided in case of death or incapacity. Unlike a Will, a Trust usually becomes effective immediately after incapacity or death. Your Living Trust is “revocable” which allows you to make changes and even to terminate it. One of the great benefits of a properly funded Living Trust is the fact that it will avoid probate and minimize the expenses and delays associated with the settlement of your estate. Q: What are the advantages of having a Living Trust? Like a Will, a Living Trust is a legal document that provides for the management and distribution of your assets after you pass away. However, a Living Trust has certain advantages when compared to a Will. A Living Trust allows for the immediate transfer of assets
A trust is a contract involving three parties. The Trustor (or trust maker) is the person who places assets into the trust. The Trustee is the person who operates the trust. The Beneficiary is the person who benefits from the trust. Usually, when a living trust is first set up, these three parties are all the same person. The trust maker sets up the trust, operates the trust and receives income from the trust. The Trustor/Trustee/Beneficiary is usually a single person or a married couple. A living trust is a trust that is created while you are still alive. You have complete control of it and can revoke or change it at any time. Because it can be changed, the IRS does not recognize it as an entity, and the beneficiary reports income earned from a living trust on the Form 1040 of the beneficiary. On the death of one or both of the Trustors, the trust will usually become irrevocable and it will no longer be a living trust.
