living trust
Noun: A living trust is a legal arrangement established by an individual (the grantor or settlor) during their lifetime. It involves transferring ownership of assets into a trust, which is then managed by a trustee for the benefit of designated beneficiaries. Unlike a will, it becomes effective immediately upon creation and typically avoids the court-supervised probate process after the grantor's death.
A living trust is used for estate planning to manage and distribute assets both during the grantor's life and after their death. - It is often revocable, meaning the grantor can alter or terminate the trust while they are alive and mentally competent. - The grantor often names themselves as the initial trustee to retain control over the assets. - A successor trustee is appointed to manage the trust if the grantor becomes incapacitated or upon their death.
- "Fund a living trust": The process of formally transferring titles and ownership of assets (like real estate, bank accounts) into the name of the trust.
- It's not enough to just sign the document; you must remember to fund the living trust for it to be effective.
- "Pour-over will": A special type of will often used alongside a living trust to transfer any assets not formally placed into the trust before death.
- He had a pour-over will to catch any assets accidentally left out of his living trust.
- Revocable Living Trust (RLT): The most common type, which can be changed by the grantor.
- A revocable living trust offers flexibility during the grantor's lifetime.
- Irrevocable Living Trust: A trust that generally cannot be altered or revoked once established, often used for tax planning or asset protection.
- They established an irrevocable living trust for certain assets to minimize estate taxes.
- Grantor: The person who creates and funds the trust.
- Trustee: The person or institution that manages the trust assets according to the trust's terms.
- Beneficiary: The person or entity designated to benefit from the trust assets.
- Inter vivos trust: A formal legal term meaning "between the living," synonymous with a living trust.
- Revocable trust: Often used interchangeably with "living trust," though technically a living trust can be either revocable or irrevocable.
- "Avoid probate": A primary goal of creating a living trust.
- One major advantage of a living trust is its ability to avoid probate.
- "Successor trustee": The person who takes over trustee duties.
- Her daughter was named as the successor trustee in the living trust agreement.
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a trust created and operating during the grantor's lifetime
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