Living Trust

A living trust is one made with the objective of maintaining acts of ownership over one's property while still alive and disposing of the assets upon his demise in accordance with his wishes.

The person who makes the trust is called the grantor. He names the individual who will become the trustee. The trustee is duty bound to implement the trust upon the demise of the grantor. During the life of the grantor, he can be the trustee himself, and maintain control of the properties even though these properties are already included in the trust.

What Is A Living Trust In So Far As The Time Of Its Creation Is Concerned?

Such an act has been termed a living trust considering that it is made while the grantor is still alive, and becomes effective at that period too. Compared to a will, the latter will only be effective upon the demise of the testator.

What Is A Living Trust With Respect To Its Funding?

A living trust must have properties held in trust. Hence, in order for a living trust to become effective, the ownership over the subject properties must pass unto the trust. For instance, ownership to any money deposited in the bank, certificate of stocks, or real properties must pass unto the trust. In contrast to the misconception of some individuals, the grantor must adopt positive measures to pass on the ownership of his properties in favor of the trust. Just simply making a living trust will not be enough to create a trust.

What Is A Living Trust With Respect To The Need For Probate?

A living trust is a legal arrangement that does away with the probate proceedings. It could be that the advantage of a living trust is that it need not pass the judicial scrutiny and approval, like a last will testament. Do not be misled however, since there are other arrangements regarding your assets, which do away with court scrutiny. Examples of these are retirement pays, pension, and insurance on life.

What Is A "Pour-Over" Will?

A "pour-over" will is essential to dispose of any asset the ownership of which he acquired after the creation of the living trust, or any property the ownership of which was not vested into the trust.

The use of "pour-over" will coupled with the living trust makes certain that the properties not under the trust will be disposed in accordance with the desire of the grantor and not what the law mandates in situations wherein there is no will.

However, a "pour-over" will, just like ordinary will, shall also undergo judicial approval before it is able to dispose of the assets.

Does A Trust Avoid Income Taxes?

There are no appreciable advantages like income tax savings with a living trust. For income tax purposes, the maker of the trust is still considered the owners of the trust. Hence, the grantor must still file his income tax return.

What Is A Living Trust With Respect To Privacy?

A living trust maintains the parties' privacy. A will turns into a public document when it is filed before the court for approval. In fact, because of being a public document, any one can obtain a copy of the same, as long as one asks for it formally. On the other hand, a living trust is a confidential act that is not subject to examination publicly. It is possible however that a living trust may be treated as a public document. This happens in cases of "pour-over" will incorporating the living trust as an integral part of it. Since a will is subject to probate, it cannot be helped that the living trust will be part of the probate too.

Finally, an important factor in understanding what is a living trust is that when ownership of a property is conveyed into the living trust for purposes of putting funds into the trust, the acquiescence of the person to whom the property is mortgaged, is necessary. At this juncture, its secrecy may be said to have been lost.

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