A living trust is a trust created during the life of the grantor. (The grantor is the person who establishes the trust and provides assets for the trust to own. The person may also be called Settlor or Trustor. All three terms have the same meaning.) Most living trusts are revocable during the life of the grantor, which means the grantor can change his mind and take his property back into his own name. The two primary purposes of a living trust are to avoid probate and to provide privacy for asset use and disbursement. Whatever property is held by the trust at the time of the grantor's death will pass to the named beneficiaries under the terms of the trust. Property that is outside the trust (and doesn't have some other estate planning feature, such as a payable on death designation, for example) would belong to the deceased individual's estate and would need to go through probate court proceedings.
A trust involves three parties: l) the grantor who sets up the trust and funds it; 2) the trustee, who is essentially the "agent" for the trust, the person who is able to perform transactions on the trust's behalf and deal with the trust property; and 3) the beneficiaries, one or more people or entities who are designated to benefit from the trust. In the most common living trust situations, an individual will form a trust, name himself as trustee, and designate himself as the primary beneficiary during his life. All of this is embodied in a written document known as "the Trust" or the trust agreement or trust indenture. Think of it as being like baby-sitting instructions for the grantor's money and other property. In the trust agreement, the grantor describes precisely how the trustee is to manage and distribute the trust property, both during his life and after his death. The trust can spell out what should be done with the assets in the event of the incompetence or incapacity of the grantor, and a variety of other situations. The grantor gets the probate avoidance benefits of a trust, but if he names himself trustee and beneficiary, he essentially retains the same benefits from the assets that he had when they were owned in his name. It's the estate planning equivalent of having your cake and eating it, too!
A living trust is a trust created during the life of the grantor. (The grantor is the person who establishes the trust and provides assets for the trust to own. The person may also be called Settlor or Trustor. All three terms have the same meaning.) Most living trusts are revocable during the life of the grantor, which means the grantor can change his mind and take his property back into his own name. The two primary purposes of a living trust are to avoid probate and to provide privacy for asset use and disbursement. Whatever property is held by the trust at the time of the grantor's death will pass to the named beneficiaries under the terms of the trust. Property that is outside the trust (and doesn't have some other estate planning feature, such as a payable on death designation, for example) would belong to the deceased individual's estate and would need to go through probate court proceedings.
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