A property right, held by one party for the benefit of another, that becomes effective during the lifetime of the creator and is, therefore, in existence upon his or her death.
A living trust, also known as an inter vivos trust, is different from a testamentary trust, which is created by will and does not take effect until the death of the settlor.
West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
That's a legalese definintion, so here it might be better explained:
A living trust is similar to a will in that it lets you control who gets your property when you die. The primary benefit of a living trust is that it can help your beneficiaries avoid the expense and delay of probate of the assets transferred to the living trust before your death.
Probate is the court-directed process of distributing a person’s assets and possessions after death. The probate court governs the distribution of your estate according to the instructions of your will if you left one, or if you did not, according to your state’s laws of intestate succession. At death, most property must pass through probate before it can be inherited. However, property transferred to a living trust prior to death does not. This is why most people prepare a living trust - to avoid probate.
In a nutshell, you create your living trust, you then transfer ownership of your assets to the trust which you manage as the trustee and then those assets pass to your designated beneficiaries upon your death. In addition, If you become incapacitated or no longer want to manage your trust assets, your named successor trustee can take over the management of the assets for your benefit and then distribute them in accordance with your wishes upon your death.
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