A living trust is a type of legal arrangement used in estate planning that allows an individual to set up a trust to manage their assets during their lifetime. The individual, known as the grantor, creates the trust and names a trustee who has the authority to hold, invest, and distribute the assets according to the wishes of the grantor. Depending on the type of trust, the grantor may be required to transfer ownership of the assets to the trust and they may also be actively involved in managing the assets in the trust.

Living trusts offer greater control over the assets and distribution of funds than a will. After the death of the grantor, the trustee has a duty to manage and distribute the trust’s assets in accordance with the grantor’s wishes. This generally involves paying creditors, notifying and empowering beneficiaries, and distributing the remaining assets to beneficiaries’ accounts according to the trust’s provisions.

Living trusts can be either revocable or irrevocable. A revocable trust allows the grantor to make changes or revoke the trust during their lifetime. This type of trust is commonly used for estate planning and asset management. An irrevocable trust, on the other hand, cannot be changed or revoked once it has been created and the grantor no longer has a say in how the trust’s assets are managed.

An important benefit of living trusts is that they bypass the probate process. In most states, when a person passes away, the will must pass through probate court before the assets can be distributed to the beneficiaries. This is a lengthy, costly process with no guarantee of success. With a living trust, the beneficiaries can start distributing the assets immediately and without court intervention.

Living trusts can be beneficial for individuals and families who wish to have greater control over the distribution of their assets, avoid probate and minimize estate taxes. Although setting up a trust is a complex and costly process, it offers legal and financial protections that can be helpful for those looking to ensure their wishes are fulfilled.