A living trust is created during your lifetime. The person who creates it is called the settlor. The trustee manages trust property according to the trust’s instructions for the benefit of its beneficiaries.
A living trust can provide a structure for managing assets now, continuing management if you become incapacitated, and transferring or holding property for beneficiaries after your death.
Is a living trust always revocable?
No. “Living” describes when the trust is created. “Revocable” describes whether the settlor retains the power to revoke it.
People commonly use “living trust” as shorthand for a revocable living trust. In that arrangement, the settlor generally retains the ability to change or revoke the trust and often serves as the initial trustee.
An irrevocable trust can also be created during your lifetime. Its terms, purposes, and rules about changes are different. The name “living trust” alone does not tell you how much control you retain or which planning benefits it provides.
How does a revocable living trust work?
With a typical revocable trust, you can serve as settlor, trustee, and beneficiary. You establish the instructions, manage the trust property, and use it for your benefit.
You can also name a successor trustee to take over if you die, resign, or become unable to serve. The trust establishes when that person can act and what responsibilities they have.
After your death, the trustee follows the distribution instructions. Those instructions may call for property to pass directly to beneficiaries or remain in trust for continued management and support.
Why does funding matter?
A living trust does not automatically govern everything you own. Assets intended for the trust need to be transferred to the trustee or otherwise coordinated with the plan. This work is commonly called trust funding.
Depending on the asset, funding may involve a deed, an account ownership change, an assignment, or coordination of beneficiary designations. The appropriate step depends on the property and the purpose of the plan.
Property properly held in a trust can generally pass under its instructions without probate. Property left outside it may follow a different path, such as a beneficiary designation, survivorship arrangement, will, or default inheritance rules.
Is a living trust a complete estate plan?
A trust is one part of an estate plan. It generally works alongside a will, financial powers of attorney, health care documents, and coordinated ownership and beneficiary designations.
Those pieces address different responsibilities. A trustee’s authority over trust property does not replace every other type of authority someone may need to help you.
Cardon Law can help you determine whether a trust fits your goals, choose the appropriate structure, and coordinate the documents and funding steps needed to put your plan into effect.
