A living trust has a number of advantages, including avoiding the probate process. However, there are also some disadvantages to it that may render it unsuitable for your estate planning needs.
updated December 5, 2023 · 5min read
A living trust, also known as a revocable living trust or a revocable trust, is a legal document that establishes a trust for any assets you wish to transfer into it. The main purpose of a living trust is to oversee the transfer of your assets after your death.
Under the terms of the living trust, you are the grantor of the trust, and the person you designate to distribute the trust's assets after your death is known as the successor trustee.
Your living trust holds the ownership rights or title to the assets you transfer to it. On your death, your successor trustee will distribute these assets in accordance with the terms of your living trust.
Because the living trust is revocable, you, as the grantor, retain control over the assets in the trust even after you've transferred ownership rights or title of the assets to the trust.
The revocable nature of the living trust means you can deal with the assets held by the trust like you were able to prior to transferring the assets into the trust. For example, you can:
You are also free to terminate the trust completely at any time. And because you have full control over the terms of the trust, you can change the beneficiaries of the trust at any time, as well as the person you've designated as your successor trustee.
There are a number of advantages to using a living trust. They include:
There are also a number of disadvantages to using a living trust. They include:
The following are ways in which wills differ from living trusts:
It's usually recommended that you still have a pour-over will to complement your living trust. A pour-over will exists to transfer your assets that aren't part of your trust to your trust when you pass away.
A living trust may be the ideal tool for your estate plan. However, there are distinct pros and cons of using a living trust which warrant careful consideration of whether a living trust is the right estate planning tool for your specific needs.
A living trust can be used to transfer property and assets to beneficiaries without going through the probate process. This can save years of time and thousands in fees. Also, it keeps your estate private, whereas a last will, once probated, will become public record.
People often use a last will and a living trust together. A last will can be used in conjunction with a living trust to name guardians for minors and express final wishes not otherwise captured in a living trust. See what kind of living trust products LegalZoom offers.
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by Belle Wong, J.D.
Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...
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