A Living Trust is an account in which the person creating the Trust (“grantor”), transfers their assets and property while they are alive. Almost any type of asset can be placed in a living trust, including: real estate, vehicles, bank accounts, and jewelry just to name a few. The Living Trust also spells out how the assets in the trust will be distributed after your passing.
With a revocable Living Trust, you are typically the “trustee” (the person who manages the Trust) and the beneficiary of the Trust while you are alive. This means the assets and property you placed in your trust can be used, sold, or added to at your discretion. Once you pass away, your Trust acts like a Will, and the person appointed by you to be the “successor trustee” (the person who takes over managing your Trust), will distribute your property or hold it in Trust for a loved one’s benefit in accordance with your wishes.
The two main advantages of a Living Trust are privacy and probate avoidance. The Living Trust controls the distribution of all of your Trust property upon your death, and therefore does not have to go through the public probate process. This allows your assets to be distributed privately, quickly, and also saves the cost of going through a public probate hearing.
Here is a simple example: Let’s say Joe Smith owns his home and it is titled in his name. If Joe wants to put his home in a Living Trust for his son Joe Jr., he simply needs to change the title on the deed of his house to something like: “Joe Smith Living Trust”. This is called funding the Trust. As long as Joe created a revocable Living Trust, he would have control over the home in the Trust while he is alive. This would include his right to remove the house from the trust or to sell the house. However, once Joe dies, the Trust cannot be changed, and the house would be distributed in accordance with the terms of the Trust.