Living trusts is a trust made to operate during your life time. It is termed ‘inter vivos’ trusts which literally is ‘among living beings’. Most simply, they can be seen as the legal opposite to testamentary trusts, which are not fully constituted until after the death of the settlor. Thus, a living trust is constituted during the lifetime of the settlor, and also comes into effect within this period. In a living trust agreement you have the grantor (also called settlor, trustor, creator or trustmaker), the trustee, successor trustee and the beneficiary.
Furthermore, it is perfectly possible for the same person to be named settlor, beneficiary and trustee. In this case, while the assets will be legally owned by the trust itself, the settlor not only derives the benefit from them, they also have total control over their disbursement within the boundaries established by the trust documents.
How does a living trust work?
For a living trust to work properly, you must transfer your assets into it. Titles must be changed from your “individual” name to the name of your trust. Because your name is no longer on the titles, there is no reason for the court to get involved if you become incapacitated or when you die. This makes it very easy for someone (a trustee or successor trustee) to step in and manage your financial affairs.
Living trusts can be a complicated area, and legal advice should always be sought before attempting to constitute one.
Please call us on 0207 183 0084 or email us on firstname.lastname@example.org if you want to draft a living trust, need advise on it and to ask us about any reservations or queries that you may have; we are always happy to assist.