A living trust is a legal tool used to manage and distribute assets during an individual's lifetime and after their death. In a living trust, the individual (known as the trustor or settlor) places assets into the trust and designates a trustee to manage these assets on behalf of the trustor and their beneficiaries. The trustee then distributes the assets according to the trustor's instructions.
A living trust differs from a will in several ways. First, a living trust takes effect during the trustor's lifetime, whereas a will only takes effect after the testator's death. Second, a living trust is a private document that does not need to be filed with the court, whereas a will becomes a public record when it is submitted to probate court. Third, a living trust can also include incapacity planning, allowing the trustee to manage the trustor's assets if the trustor becomes incapacitated, whereas a will does not have this capability.
One potential limitation of a living trust is that it can be more costly to set up and maintain than a will. Additionally, certain assets may not be eligible to be placed in a living trust, such as IRAs and other retirement accounts. It is important to consult with an experienced estate planning attorney to determine the best plan for your individual circumstances.
If you are considering setting up a living trust, it is important to gather all necessary documents and consult with a licensed attorney who can help you navigate the legal process. Additionally, it is important to keep the trust up to date as your circumstances change and to regularly review and update the trust to ensure it reflects your wishes.
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