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What is a living trust?

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Updated: 4/13/2007 6:35 pm
A living trust is basically a legal arrangement in which a person retains, manages, controls and eventually disposes of property for another person. The person who retains, manages and controls the property is called the trustee. The person for whose benefit the property is being retained, managed and controlled is called the beneficiary. The person who establishes the trust and places property into it is known as the grantor or settlor of the trust. It is possible for the same person to be the grantor, trustee and a beneficiary of the trust he or she creates. Like a will, a living trust is created while you are still alive. Unlike a will, however, the living trust operates both during your lifetime and after your death. A will, on the other hand, does not take effect until your death. A living trust allows you to arrange for the management of your property while you are alive. A living trust also allows the property in the trust to pass to beneficiaries of your choice after your death without probate proceedings. Placing property into a living trust does not necessarily mean that you lose control of these assets. In most cases, you can keep as much responsibility for the management and control of the trust property as you wish. A living trust may provide that the trustee shall not distribute the assets in the trust upon your death, but that the trustee shall continue to manage the property in the trust for the beneficiaries of your choice in the event the beneficiaries are minors, disabled or have other special needs. The specific instructions, directions or limitation imposed on the trustee in the management and distribution of the estate assets can vary widely depending upon the specific concerns of the grantor who establishes the trust. A knowledgeable attorney can assist you in creating a trust if a trust is right for you.
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