(714) 477-7885
English | Tiếng Việt | Deutsch | Español | Filipino | Français | Italiano | Português | ไทย | 日本語 | 简体中文 | 繁體中文 | 한국어
(888) 996-8818

What Is a Living Trust?

Estate Planning, Financial Planning

A living trust, also known as a revocable living trust or inter vivos trust, is a legal arrangement that allows an individual (the grantor or settlor) to place their assets, such as real estate, bank accounts, investments, and personal property, into a trust during their lifetime. The grantor typically acts as the trustee, managing and controlling the trust assets. The key feature of a living trust is its “revocable” nature, meaning the grantor can change or revoke the trust at any time during their lifetime.

Here are the fundamental components and characteristics of a living trust:

  1. Grantor: The person who creates the trust and transfers their assets into it is known as the grantor or settlor. The grantor maintains control over the trust during their lifetime.
  2. Trustee: The grantor usually serves as the initial trustee, managing and controlling the trust assets. However, the trust document specifies successor trustees who will take over if the grantor becomes incapacitated or passes away.
  3. Beneficiaries: The individuals or entities (such as charities) who will receive the trust assets upon the grantor’s death or according to the terms specified in the trust document are the beneficiaries.
  4. Assets: Living trusts can hold a wide range of assets, including real estate, bank accounts, investments, personal property, and more. The trust document specifies which assets are part of the trust.
  5. Revocable: One of the defining features of a living trust is that it is revocable, meaning the grantor can make changes to the trust, amend it, or revoke it entirely at any time during their lifetime. This flexibility is a significant advantage.
  6. Avoidance of Probate: Assets held in a living trust generally pass to beneficiaries outside of the probate process. This can save time and money and provide privacy for the estate.
  7. Privacy: Living trusts are typically private documents, and the distribution of assets through a trust is often not a matter of public record. This can help maintain privacy for the grantor and beneficiaries.
  8. Incapacity Planning: Living trusts often include provisions for the management and distribution of assets in the event the grantor becomes incapacitated, avoiding the need for court-appointed guardianship or conservatorship.
  9. Estate Planning: Living trusts are commonly used as part of a comprehensive estate plan to ensure a smooth transition of assets to heirs and beneficiaries while minimizing the impact of estate taxes, if applicable.

It’s important to note that living trusts can be valuable estate planning tools.  Contact us to determine the best approach for your specific situation.