What Is a Living Trust?
In recent years, it seems that the words “trust” or “Living Trust” are coming up in conversation when people are discussing financial issues with their bankers or financial advisors or when speaking with an attorney, regarding inheritance issues and who will take care of their minor children upon their deaths. While most of us have heard of a trust, likewise for most of us, we do not understand what the trust actually is and how it can benefit our families as part of our financial and estate planning.
There are several types of trusts that can be used for different purposes from tax planning to business planning. The trust I will be describing in this brochure is the “Living Trust,” also known as the “Revocable Living Trust.” More and more people have been using this type of trust as a primary means of planning inheritance issues.
The Living Trust is technically a separate entity. Either you, or
you and your spouse will be the persons who create the trust. The
persons who create the trust are known as “donors” or “grantors.”
The Living Trust designates persons who are in control of operating
the trust. There persons are known as “trustees.” The trustees are
the administrators of the trust. Both you and your spouse would be
the trustees of your Living Trust. There would be no need to appoint
a bank or lawyer to serve as trustee!
Apart from being in complete control of the Living Trust as trustee, during your lifetimes, you and your spouse would be the “beneficiary” of the trust. So one can see by being both the trustee and the beneficiary of their own Living Trust, they fully control all matters regarding their own trust. As Donors, you can amend your trust for whatever reasons, as many times as you like during your lifetimes, as your family or financial situations may change.