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A trust is a written agreement where one or more persons [called alternatively the “Settlor(s)” or “Trustor(s)” or “Grantor(s)”] agree to transfer property to the control of another person(s), called a trustee(s), who in turn will hold the property for another person(s), called a beneficiary(ies).

A "living trust" is simply a trust create while the Settlor(s) are alive, rather than one that is created at death. 

The most common type of “living” trust is a “revocable” living trust, meaning that the Settlor(s) can revoke the trust during his/her/their lifetime.  Since the typical “living” trust also names the Settlor(s) as the initial trustee(s) of the trust and as the initial beneficiary(ies) of the trust, it means that revoking the trust is very easy to do.  There are also many kinds of “irrevocable” trusts, such as "Insurance Trusts" Under these trusts, the trustee is normally NOT the settlor; if s/he was, s/he would be able to revoke the trust.

What is the Difference Between a Will and a “Living” Trust?

If you are confused about the difference between a will and a trust, you are not alone. Both documents help protect families and indicate who will receive certain assets and make decisions upon a family member’s death. However, wills and trusts operate very differently, and it’s important to understand their differences.

The Will Defined

A will is a written document that spells out how your property will be distributed when you die. It must be signed and witnessed. A will can be revoked or amended any time before the maker’s death. A will cannot make any provisions for incapacity because it only comes into existence when the maker of the will dies.

A will lets you direct who you would like to receive your assets and who you want to raise your children upon your death. However, those are the only main things that a will can accomplish. If you die with a will in existence, your family will have to go through a court process known as probate.  Probate is a public process that can also be time-consuming and expensive.

A trust, on the other hand, as already stated, is a written agreement designating someone (the trustee) to be responsible for managing your property while you are alive AND WHEN YOU DIE.  A revocable living trust makes it easy to transfer your assets to people you choose in the event of your death or incapacity. While you are living and are mentally competent, you are the trustee in control of your property, and you can change or dissolve the trust at any time.  When you die with a trust in place, the designated successor trustee takes over control of the assets that are in the trust and transfers them directly upon your death to your heirs and your family thus avoiding the public probate process.

Which is Best?

Every family is different, and it is difficult to make generalizations about whether a will or a trust is better overall. However, in general if you have minor children, a child or grandchild with special needs, have a certain amount of assets (valued at more than $150,000), or own real estate, a trust may be the best option for your family.

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