Understanding Living Trusts

Living trusts can be an excellent way to transfer your assets to your loved ones while maintaining control over the assets during your lifetime.

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understanding living trusts

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Updated on: April 26, 2024
Read time: 3 min

Living trusts allow you to enjoy the benefits of your assets while you're alive and pass them automatically to your chosen beneficiaries once you're gone. Gaining a better understanding of living trusts can be beneficial not only for yourself and your estate but also for your loved ones.

As you compile your estate plan, take some time to learn about what living trusts can do for you. Creating a living trust is no more complicated than making a last will and testament, and it can provide additional advantages for your estate.

Living trust basics

A living trust, also called a revocable or inter vivos trust, is a living legal document as its name implies. A living trust is revocable, which means the creator—also called the grantor—can cancel it at any time. In fact, the creator retains complete control over the assets in the trust and over which assets are in the trust at all. As a trust creator, you can add and remove property as you wish throughout your lifetime. This flexibility is one of the main advantages of a living trust.

Every living trust needs a trustee, who is usually the creator; a successor trustee to take over when you're gone, and one or more people who will receive trust assets called the beneficiaries. You may choose anyone you have confidence in or even a corporate trustee, such as a bank, to be your successor trustee.

You also must decide which property to place in the trust. Assets are placed into the trust by transferring ownership by deed or title to the trust. For example, if your family home is placed in the trust, the deed must be transferred to name the trust as the owner. The process of placing assets in the trust is called “funding the trust," and it is the point at which the trust is officially formed.

Advantages and disadvantages of creating a living trust

Living trusts have several potential benefits for your estate and your beneficiaries. The main advantage is that a living trust bypasses the probate process upon the trust creator's death. Probate is the court-guided process through which a deceased person's assets are distributed. With a living trust, the property passes automatically to the designated beneficiaries, which means they get them more quickly with no additional costs to the estate. In some instances, then, a living trust can also help maximize the inheritance of beneficiaries.

Another major benefit of a living trust is that, if you become incapacitated and can't manage your assets, a living trust allows you to choose the person who would take over your trust. For this eventuality, you should have an incapacity clause that sets the criteria that will define incapacity.

The only true disadvantage to creating a trust is that it simply may not be necessary. Because of up-front costs to create a trust, the expense of a living trust may not be justified in some situations.

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Further reasons for creating a living trust

While you don't need a reason beyond simply wanting to arrange important assets in a living trust within your estate plan, in some instances, you should strongly consider a living trust. If you have minor children or a loved one with special needs, for example, you can set up a trust to distribute income to children in a measured way or simply set aside money to care for your loved ones.

Perhaps you have acquired substantial real estate holdings and no longer care to manage them personally. Overall, a living trust allows you to distribute your assets according to your wishes without court intervention—and that may be reason enough for you.

Whether you have special life circumstances or simply want to make things easier on your loved ones after your death, a living trust may be a smart move. If you want to incorporate a living trust into your estate plan, you should consult with a legal professional to ensure that the document accomplishes exactly what you want it to do.

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This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.

52 days ago
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Grateful to Patti Green

Patti Green helped me so much to finish my order. She was very patient and pleasant with me and guided me so well with my living trust. She made it clear and explained things that I could understand to finish this. She is an asset to your company and I would recommend her with excellence

CU
54 days ago
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I had no Idea what to do to update my…

I had no Idea what to do to update my Living Trust. They answered all my questions and they also helped me get info I did not know I needed.

Bryan Q
60 days ago
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Living Trust Premium

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sremeikis
68 days ago
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I spoke to the representative today about a Trust...

I spoke to the representative today regarding a question about an existing Living Trust. She was very helpful - told me exactly what I needed to know and how to accomplish it. As a representative in the Financial field I guide clients all the time on where to get documents done right - and its always LegalZoom - easy and effecient!

Gareth
70 days ago
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LegalZoom

I was impressed by the user-friendly interface and the outstanding support I received while creating a Revocable Living Trust. The ability to connect with support representatives in real time to address my questions was incredibly valuable. For those looking to establish a straightforward trust, I can highly recommend LegalZoom.

TDM
76 days ago
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Rida has been very helpful with respect…

Rida has been very helpful with respect o guiding me through the process of properly revising the Living trust for my elderly parents. His patience has been exemplary.

Frantz Michel
84 days ago
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Elizabeth Tisdale

Elizabeth Tisdale, knowledgeable,been having problems with the forms in my living trust,for the past two weeks and had to pay every time, Elizabeth was patient with me and explained every detail until it was corrected,she get my 5 stars

MARIA CORONA
84 days ago
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Taking the Initiative

Taking the initiative to do the info. research on our living Trust...set up back in 2016..Made the call an efficient, as well as a pleasant experience. Very thorough and friendly. Set up our atty consultation Thanks for great service!

Vicki Switzer
91 days ago
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Carmen was so patient with me

Carmen was so patient with me! Thank you for all your direction and guidance with my living Trust! Great job!

Tina Garcia
94 days ago
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Tammy was wonderful and very…

Tammy was wonderful and very knowledgeable. It's because of her that I am going to open a living trust with legal zoom. She was great. Thank You

Erin
102 days ago
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Pleasant Experience

Patience and weel given explanation about the process of how a "Living Trust" & "Deed" works after transitioning and guidance on how to contact an attorney whenever I need legal advice.

Sharron Martin
102 days ago
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Excellent LegalZoom Attorney

The LegalZoom attorney was extremely helpful in the "walk thru" assistance as I prepared the Living Trust document. The service was excellent.

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111 days ago
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Happy with my initial contact with Legal Zoom

Rebecca fully answered my questions about creating a living trust. She is friendly and professional, and with my mind at ease, I am looking forward to starting this process with Legal Zoom. I am confident that this will be the best route for me to take to make things a lot easier for my family when I'm gone. (And, easy for me!) I plan to be in touch in the next several weeks. Thanks, Rebecca!

Carol
129 days ago
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Michelle very professionally guided me…

Michelle very professionally guided me with her knowledge and amazing patience through the entire process of setting up my Living Trust. I am so relieved and grateful for her help. I have used LegalZoom before and you are my go to for legal advice. Thank you again Michelle.

Paula Bateman
137 days ago
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Quality Staff

I needed to revise my entire living trust and had put it off for years. Your staff member Eden walked me through the process with such patience and concern. Had I known it would be so easy, I would have never put it off this long. A testament to you quality staff.

Ady Filipescu
146 days ago
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Really great job in guiding me to…

Really great job in guiding me to finish my living trust .

Ronnie Ball
152 days ago
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5 Stars

5 Stars – Outstanding Customer Service from Tammy at LegalZoom I had the pleasure of working with Tammy from LegalZoom regarding my living trust documents, and I couldn't be more impressed. She was professional, patient, and incredibly knowledgeable. Tammy took the time to walk me through every step, answered all my questions clearly, and made a complex process feel simple and stress-free. Her attention to detail and genuine care made all the difference. LegalZoom is lucky to have someone like her on their team. Thank you, Tammy!

Cn
152 days ago
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Ease and help of making changes to my…

Ease and help of making changes to my living trust. LegalZoom rep walked me through the process without any difficulties. Really like working with LegalZoom.

Gregory Bechtol
159 days ago
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Enjoyed working with Kevin to finalize…

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JOHN in CALIFORNIA
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