This type of trust cannot be modified, changed, added to, or canceled during the life of the grantor. Irrevocable Living TrustsĪn irrevocable living trust is also a well-known type of living trust and is often used in a variety of situations. Many people set up revocable living trusts because they enjoy the idea of being able to protect their assets from probate upon their death, but still want to maintain control over those assets during life. However, if assets are owned by a trust at the time of the grantor’s death, those assets avoid the probate process. A revocable living trust can help the grantor to avoid probate, which can be costly and time consuming for family members following the grantor’s death. This type of trust can be modified, changed, added to, or even canceled at any point during the grantor’s life. Revocable Living TrustsĪ revocable living trust is likely the most widely used type of living trust. Determining what kind of living trust you need and how it can potentially benefit you depends largely on your unique situation and what your financial goals are for yourself and your family. There are many different types of living trusts and each can be used for a variety of purposes.
What makes a trust a living trust, or an inter vivos trust, is that it is created when the grantor is still living, as opposed to the trust being created at the time of the trustmaker’s death. When and how those assets transfer to the beneficiary vary depending on how the trust is created and under what terms it is created. The trustee does not own the assets contained in the trust – instead, the assets belong to the trust itself and the trustee simply manages those assets. The trustmaker, also called the grantor or settlor, agrees to transfer property to the trustee, who will then manage the trustmaker’s assets on behalf of the beneficiary. A trust is simply a fiduciary agreement made between three people, a trustmaker, the trustee, and a beneficiary. Understanding what a living trust is boils down to knowing what a trust itself is. The process of creating a living trust can seem overwhelming at first, however, it can be significantly less complex when you understand the basics of what living trusts are and how they can be utilized to help you create a comprehensive estate plan that covers all your bases. A living trust can be an excellent estate planning tool for many individuals with significant assets that they want handled a certain way.
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