- What is a living trust?
- June 7, 2013 | Author: Christopher J. Acklin
- Law Firm: Grand Rapids Law Group - Wyoming Office
Generally, a trust is a an agreement where are person, persons, or other entity holds and administers property for the benefit of another person (the "trustee"). The agreement spells out the terms of this relationship, such as how long the person holds the property, what they can do with the property, and how they are to handle any money involved.
A living trust, also known as an inter vivos trust or revocable grantor trust, is made while the party having their property held (the "grantor") is alive. It is different than a living will (which discusses a person's choices on being kept alive artificially), or a testamentary trust (which is created by some wills). Typically, the grantor in a living trust is the trustee and also the beneficiary (the person the property held by the trustee goes to when the trust ends), although other trustees may be named in case the original trustee becomes disabled or dies. These successor trustees also then receive the property upon the original trustee's death, to handle according to the terms of the trust.
While the terms of a trust are often set and unchangeable, a living trust's terms are typically always changeable by the grantor. This means that during his/her lifetimes, you can change the terms of the trust at any time, which allows the trust to be flexible.
The primary reason living trusts are created is to avoid probate. If a person dies with no property in their name at death, generally there is no need for probate court to get involved. However, if they do have property, often probate court is needed to declare how the property should be dispensed. This can also be an issue if there is no will, or if somebody fights the will (such as a new spouse that is not included in the will, or children/caretakers that were not included in the will). This can be avoided by having a living trust, as the living trust already has the property that would have been in the your name at death. And by setting out the terms that the successor trustee, who would take care of the estate when the you die, has to follow, you can have the peace of mind of knowing that your property will be handles in the manner you want when you die.
However, much like wills, the laws and rules regarding the use of a living trust can be difficult to manage without the advice of an estate planning lawyer. They can help you to understand your needs and how a living trust or will can best help you to protect your estate when you die. Your estate planning lawyer can provide you, as well as your successor trustees (those who will take care of your estate when you die), with vital information on the proper handling of your trust.
A living trust is not right for everyone, but for many people, it can provide an easier transition for their loved ones after they die. If you are unsure of how your estate would be handled in case you die, or you have not had a will or trust made, a consultation with an estate planning lawyer can be the first step to saving yourself and your loved ones a great deal of trouble and hassle.