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Educational Consumer Tips

Living Trust

Author: Better Business Bureau
Published:

In a living trust, assets including savings accounts, real estate and securities are put into a trust while the owner is still alive. Legal title to the assets is transferred to a trustee. The owner can name himself or herself as the trustee. The trust contains instructions for handling assets during the owner's lifetime and distributiion of assets after death. There are two types of trusts, revocable and irrevocable. A revocable trust can be changed or revoked at any time during the owner's lifetime. An irrevocable trust cannot be recalled or abolished after its creation. Living trusts are a way of avoiding probate, the procedure that determines the distribution of a deceased person's property, whether or not there is a will. A living trust avoids probate because at the time of death the trust, not the deceased, owns the assets. Only property in the deceased's name must go through probate. Probate can be a costly, time-consuming process, although this is not true in every case. Some salespeople paint living trusts as a magical cure for all estate planning, making probate look like an expensive and very agonizing process. Since the law, costs and the amount of time affecting both probate and trusts vary from state to state, consumers should contact a reputable local attorney or estate planner to discuss their personal situation. A living trust may be a very good option; however, it is not for everyone.