LIVING TRUST

Summary

A living trust is a legal arrangement created while a person is still alive, where they transfer ownership of their assets to a trust entity. The person who creates the trust (called the grantor or settlor) typically serves as the initial trustee, maintaining control over the assets during their lifetime. Upon death or incapacity, a successor trustee takes over to manage and distribute the assets according to the trust's terms. Unlike a will, a living trust helps assets avoid the probate process, potentially saving time and money while maintaining privacy.

Usage Context

Understanding living trusts is crucial when studying estate planning, probate law, trust administration, and wealth transfer strategies. This concept is particularly important when comparing different estate planning tools and their advantages and disadvantages.

Common Confusions

• Thinking a living trust and a will are the same thing
• Believing that creating a living trust means you don't need a will
• Assuming all living trusts are revocable
• Confusing living trusts with testamentary trusts
• Thinking the trust automatically includes all assets without proper transfer
• Believing living trusts provide tax advantages in all situations