Trusts have been around for hundreds of years; specifically, the living trust gained popularity in the 1970s as a probate avoidance technique. Today, living trusts are often used as a foundational document in estate plans.
We’ve found that many folks have both questions and misconceptions about the living trust; so, in this three part series, we answer your living trust questions.
I am confused about the different types of trusts. Is a living trust always called “living trust”?
Great question. All those trust names can be confusing. A living trust may also be referred to as a “revocable living trust,” “inter vivos trust,” “loving trust,” or, just plain “trust.”
To differentiate the living trust from other types of trust, the living trust is:
- Created while you’re alive
- Effective while you’re alive
- Completely revocable
In contrast, trusts that take effect at one’s death are called testamentary trusts. Other trusts that are not revocable are used for various advanced planning strategies such as tax reduction and asset protection.
Who’s in control of my trust and my assets?
The person who creates the trust is alternately referred to as the “trustor”, “trust maker,” “grantor,” or “settlor.” The person (or entity) that manages the trust assets, carries out the trust instructions, and controls assets is called the “trustee.” Often, you are both the trustor and the trustee of your own trust.
This means that you’re the trustor, trustee, and beneficiary of your own living trust. You created the trust, you control the trust assets, and the assets are used for your benefit.
There’s so much to talk about when it comes to a living trust. Please continue reading at part 2 of 3, An Estate Planning Attorney Answers Your Living Trust Questions.