Why Do You Need a Living Trust

Living trust and Estate Planning text on Document form and Gavel isolated on office desk. Bangoland/ShutterStock

Passing on assets to one’s kin after passing away can be done several ways. Making a will is the most common method. It successfully passes your possessions to the designated individuals, but only after going through probate and estate taxes. A better method for some people is to make a living trust, which also provides you with some excellent benefits.

Two Types of Living Trusts

Living trusts are available in two forms—a revocable trust or an irrevocable trust. Each one has its own benefits and downsides—depending on the goal of creating the trust.

The owner of the possessions, called a “grantor” makes the living trust while still alive. As long as he or she is still living, changes to a revocable trust can be made at any time. Changes can involve the contents or the beneficiaries—or may cancel it altogether.

The Difference Between a Living Trust and a Will

A will only becomes valid after the death of the testator—the one who wrote the will. Up until that time, it can be changed; after death—it is permanent, but may be challenged by other parties. Also, the proceeds of a will are made public. If privacy is desired, most often the proceeds of a trust are kept private.