How Does a Living Trust Work?

November 8, 2007

A Living Trust is also known as an “inter vivos” trust. It is created during your life and has three key elements:

  1. Trustor – This is the person who sets up the trust;
  2. Trustee – The person appointed by the Trustor to actually manage the trust; and
  3. Beneficiary – The person(s) who receive the assets from the trust. 

          When you create a trust, as Trustor, you determine the terms of what goes into the trust, how its managed, and eventually distributed. That means you have complete control over your Living Trust.  For example, only you can make any changes to the Trust (by amending it), or cancel it (by revoking it).  

When you create your trust, you appoint a Trustee. So, as Trustee, you manage your estate in much the same way as you do now.  You may: buy, sell, mortgage or give away assets that are held by the Trust; transfer ownership of property back into your name; add property to the Trust; or change your Beneficiaries or when they are to receive the inheritance. 

Once you are deceased, your Successor Trustee(s) will take over management of the Trust on your behalf and make the final distributions, as you have directed. 

Your Beneficiaries will inherit your estate - the property held in your trust passes to your Beneficiaries according to the terms of the trust. The probate court usually does not have to be involved, and the transfer of property is a straightforward process. AND happens just as you have directed.

Posted by Dan Dorsch | Filed Under Living Trust, Estate Planning Documents, Estate Planning, Blog 

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