What is a Living Trust?

A living trust is legal written document that partially substitutes a will. A person's assets are put into a trust and administered for their benefit, either by themselves or someone else.

Jasper L. Edwards

 

A living trust is legal written document that partly substitutes for a will. The person's assets are put into a trust and administered for their benefit. This is done throughout the course their life and transferred to their beneficiaries once they pass on. Most people tend to appoint themselves as "trustee in-charge" of their Trust's assets. This means that even though their assets have been placed into Trust, they still remain in control as long as they areLiving Trust  alive. However, this is not always the case. A person may also choose to name a successor trustee who will look after the Trust’s assets if they are unable or unwilling to do it themselves. The Trustee may be an individual or institution.

Your Living Trust agreement provides for the following parameters:

  • Gives the appointed Trustee a legal right to control and manage the Assets contained in the Trust.It states that Trustee should look after Trust’s assets for your benefit throughout the course of your life. 
  • It contains the names of the beneficiaries. They could be individuals or charitable organizations. 
  • The agreement provides the Trustee with the necessary guidance, authority and powers to distribute the Trust’s assets. They are considered to be a Fiduciary, which means that he or she has a position of trust and confidence. As a result, they are subject to high standards and strict responsibilities. For instance, a Trustee cannot use the Trust's assets in an unscrupulous manner or for their own benefit without explicit permission. In fact, the Trustee must hold and use the Trust's Assets only for the good of the beneficiaries.  

Just as with a Living Will, a Living Trust helps to ensure that all your assets are managed according to your wishes even if you are unable to do it yourself. Initially, you may serve as your own Trustee, but as time goes by, you will need to choose a successor. After your death, he or she will gather your assets, pay debts, claims or taxes and then distribute your estate in accordance with your wishes. The Trustee is quite similar to the Executor of a will. The only difference is that a Trustee can do all these things without the approval or supervision of the courts. 

A Living Trust is a crucial component of estate planning. It should not be taken lightly. People with vast estates should have a Living Trust to avoid any future conflicts within the family.

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