A living trust is sometimes referred to as a revocable living trust or family trust in some jurisdictions. Essentially, a living trust is a legal tool. It is literally an estate-planning legal document that governs title to a person's real property and assets. Incidentally, title is synonymous in this context with ownership.
A living trust permits the trustee who creates it to have unlimited access to and complete management and control of assets during that party's life span. The living trust also permits a party to pass property and assets after his or her passing to family members, friends, or other loved ones. The living trust enables a party to appoint a representative called a successor trustee to make sure that property is distributed to the proper parties after a party's death, in keeping with the wishes and preferences as expressed by that decedent.
When a party decides to create a living trust, he or she must transfer ownership of assets to the trust entity or tool. The process by which a party transfers his or her assets to the trust is referred to as funding. While a party is transferring title to his or her assets to the trust, he or she does not have to relinquish any measure of control or decision-making. In fact, a party is still able to buy, sell, borrow, and transfer during this process of transferring title.
At first glance, a living trust resembles a will in many respects. For example, both legal estate-planning tools contain details, instructions, and information about how a party wants his or her estate to be administered and handled after his or her death. Yet, there are some marked and distinct differences between living trusts and wills.
Most significantly, a living trust that has been appropriately and properly funded accomplishes some distinct aims that a will does not. A living trust: