Living Trusts


In general, a "trust" is a legal entity created by an individual in order to transfer control of real and/or personal property to him- or herself or to another person or entity to be managed for the benefit of beneficiaries. The person who creates the trust is called the "settlor." Those who benefit from the trust are called the "beneficiaries." The person who holds the property in trust for the benefit of the beneficiaries is called the "trustee." The property contained in the trust is called the trust principal or corpus ("body"), and the written document that describes the trust and sets forth the terms and conditions of the trust is called the "trust instrument."

An inter-vivos ("during life") trust, more familiarly known as a "living trust," allows you to put your assets into a trust during your lifetime. Typically, you serve as the trustee of your trust, and manage your assets much as you do now – buying, selling or gifting property just as you have always done. The difference is, of course, that you are not acting in your personal capacity; rather, you are acting in your capacity as trustee of your living trust.

So, what happens if you die, or otherwise become unable to serve as trustee of your living trust? In the trust instrument, you will have named a "successor" trustee or trustees to serve in your place and stead if you are unable to do so because of death or incapacity. This avoids the delay and red tape of expensive guardianship proceedings. Your successor trustee can assume the duties you had as trustee and continue to carry on the business of the trust just as you had been doing.

A living trust provides one of the ways to avoid probate. Probate is the means by which the executor, or personal representative, of your estate obtains the authority to dispose of property you own at the date of your death. Since the trust owns the assets you transferred to it, probate is unnecessary.

 

Wills & Trusts

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