A Living Trust is also sometimes called an inter vivos trust. Inter Vivos is just a Latin phrase that denotes that the Trust is in effect while you are alive. These types of trusts can be either Revocable or Irrevocable. If it is Revocable then it can be changed at any time or even ended. An Irrevocable trust is one that normally can not be ended and is more difficult to alter.
Living Trusts are often used in Estate Planning and Asset Protection Planning. Essentially, the trust rather than you become the owner of your property. Often times the same person who made the trust is also the first Trustee. This makes the trust a Grantor Trust. Grantor Trusts are even ignored by the IRS. You could have a Grantor Trust and still only file your normal 1040.
Living Trusts like all trusts must be funded to have any effect. Funding is essentially the process by which you transfer the title of your Home, Financial Accounts, vehicle, and other things to a Trust. Anything that has not been put into the trust often is not protected by the Estate Plan or Asset Protection Plan. Often, Life Insurance Beneficiaries and other Beneficiaries are also changed to be the Trust.
The Trustee controls the property while it is withing the Trust. This Trustee is often the Grantor until the Grantor either becomes disabled or dies. When this happens, a Successor Trustee will take over the maintenance of the Trust. This is often helpful to keep the Grantor’s privacy protected from a Guardianship or Conservatorship. Since the property and items are owned by the Trust, none of the financial data pertaining to them normally end up in the public court file.
Often times, when the Grantor dies, the Trust will then see to the distribution of assets in accordance with the Grantor’s wishes. Sometimes this includes creating and funding other Trusts depending on the Estate Plan. Often times, a Living Trust does not replace a Will. a Pour Over Will is used to gather up any assets that were not funded into the Trust and put them into it after death.
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