What is a living trust?
by Admin
Posted on 02-03-2024 11:57 AM
A trust is when one party (known as the trustor) gives a second party (the trustee) the job of holding property or assets for a third party (the beneficiary). There are two basic types of trusts: a living trust and a testamentary trust. A living trust is an agreement you make with a trustee — who holds legal title to your property.
It is created and goes into effect while you are still alive. A testamentary trust is a trust that goes into effect upon your death and is often embedded in a will.
A trust is a legal arrangement that allows you – the grantor – to transfer assets to a trustee. The grantor creates terms that tell the trustee how to manage the assets in the trust. A trust is different from a will in that once the grantor transfers assets into the trust, it becomes effective. The two main types of trusts are a living trust and testamentary trust. The grantor creates a living trust during his or her lifetime. Directives in a will create a testamentary trust after the death of the grantor. When you create an estate plan, you choose a trust that best benefits you during life and after death.
There are many types of trusts; a major distinction between them is whether they are revocable or irrevocable. Revocable trust: also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor's) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor. You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms and assets during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death.
What is the difference between a will vs. a living trust?
George: a revocable living trust is the most common tool used by estate planners and represents a fundamental building block for most estate plans. Lauray: a living trust is a lot like a "regular" account in that you still have control over your assets.
You can buy, sell, and trade assets as you normally would. You're able to move assets into and out of the trust at your discretion. The key difference is that you can put additional controls and designees in place to help protect your assets should you pass away or become incapacitated. What is a revocable trust?
a revocable trust is a trust that can be changed at any time and in any way during the owner's lifetime, up to and including total revocation.
Here is a quick comparison of what wills and living trusts can do. Read below for details about each characteristic. Name beneficiaries for property. The main function of both wills and trusts is to name beneficiaries for your property. In a will, you simply describe the property and list who should get it. Using a trust, you must do that and also "transfer" the property into the trust. (see "transfer of property into the trust," below. )leave property to young children. Except for items of little value, children under 18 cannot legally own property. When you leave property to a minor, that property must be managed by an adult – at least until the child turns 18.