A living trust is a legal document that you, the grantor, create during your lifetime. Similar to a will, a living trust outlines your wishes regarding your assets, dependents, and heirs. The key difference is that while a will only takes effect after your death and must go through probate, a living trust bypasses the costly and time-consuming probate process. This allows your successor trustee (who functions similarly to an executor of a will) to execute your instructions as laid out in your living trust upon your death or if you become incapacitated and unable to manage your financial, healthcare, and legal affairs.

 

When you set up a living trust, you transfer ownership of your assets from your name to the name of the trust you control. For example, assets would be transferred from "Bob and Sue Smith, husband and wife" to "Bob and Sue Smith, trustees under trust dated (month/day/year)."

 

Legally, you no longer own these assets; they belong to your trust. This means there is nothing for the courts to control when you die or become incapacitated. The concept is straightforward, but it's what keeps you and your family out of the courts and ensures your wishes are honored seamlessly.