A living trust is a type of trust that is created during a person’s lifetime.
It is often used as part of an estate plan. A living trust can help explain who has authority to manage property, who should benefit from that property, and what should happen if the person who made the trust dies or can no longer manage things on their own.
How a Living Trust Works
The person who creates a living trust often stays in control while they are alive and able to act.
In many living trusts, that person also serves as the first trustee. That means they are still in charge of managing the property in the trust.
The trust can also name a successor trustee. This is the person or institution who steps in later if the first trustee dies, resigns, or can no longer serve.
Why People Use Living Trusts
People often use living trusts because they want clear instructions for what should happen during life and after death.
A living trust can explain who should manage property if someone becomes sick, injured, or unable to act. It can also explain who should receive property after death and whether that property should be given out right away or held for a longer time.
A living trust may also help avoid probate if it is properly prepared and funded.
Why Funding Matters
A living trust does not automatically control everything a person owns.
For the trust to work properly, property usually needs to be transferred into the trust or connected to the trust in the right way. This is called funding the trust.
Funding may involve deeds, bank accounts, investment accounts, beneficiary forms, business interests, or other planning steps.
