Living Trusts: How They Work

By James Parker
/
January 10, 2022

Many people are familiar with the idea of a trust: an account containing money, assets, or property managed by a trustee and given to a beneficiary with certain limitations. The common understanding is that the trust is created when the grantor of the trust passes away. There is, however, another type of trust: a living trust.

The main thing that distinguishes a living trust from a traditional trust is that the grantor is still alive when the trust is created and the assets transferred. Living trusts will still be managed by a trustee and the beneficiary will still receive the benefits of the trust after the grantor passes away. By creating a living trust, the grantor can more smoothly pass the assets on, potentially circumventing certain taxes or court requirements. 

Living trusts come in two major varieties: revocable and irrevocable trusts. In a revocable trust, the grantor can also choose to designate themselves as the trustee. This gives the grantor full control over how the trust is managed and allows the grantor to retain a greater degree of control over the entire situation. The downside of a revocable living trust is that the assets will still be considered the property of the grantor and therefore be susceptible to end-of-life penalties such as estate taxes.

An irrevocable trust avoids estate tax and other end-of-life penalties by divorcing the assets of the trust from the grantor’s property. The drawback to an irrevocable living trust is that the grantor has very little control over how the trust is handled once it is established. An irrevocable trust is effectively the trustee’s property once it’s created and the beneficiary is all but locked in. 

If you would like to establish a living trust or explore your options for securing assets you wish to pass on, you will need the help of an experienced trusts and estates attorney. A trusts and estates attorney has the experience and knowledge to help you create a long-lasting and watertight plan for your assets when you pass. 

The best place to find an experienced trusts and estates attorney is Attorney at Law.

At AAL, our nationwide network of attorneys and law firms allows us to match you with a trusts and estates attorney in your area. Our partners have the resources, legal expertise, and experience to fine-tune an estate plan to your specific needs. 

In addition to having extensive resources and expertise, our partners excel in client care. Our partners will be straightforward and efficient and able to answer your questions, ensuring your experience is an excellent one. 

Don’t wait. Contact AAL today for a free, no-obligation consultation and secure your future.

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