Back to Basics: What is a Living Trust?
A living trust is a legal document that serves you during life if you become incapacitated and at your death because it avoids probate (a long and expensive court process to get your assets transferred to your heirs). The creator of the trust can be called the grantor, settlor or trustor. The creator has special authority over the trust to make changes or revoke the trust at a future time. These powers are typically unique to the creator and no one else.
You can think of the trust like a big box where the creator holds his or her belongings (e.g., his or her house, bank accounts, personal items). The trustee oversees the trust—your box of belongings. While the creator of the trust is alive and healthy, he or she is usually the trustee, but if the creator becomes incapacitated during life, the trust names successors to act. Likewise, if the creator dies, these same successors step into the role of trustee. A trustee must follow the terms of the trust and must act in the best interest of the trust beneficiaries.
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