A living trust, also known as a revocable trust, is a legal arrangement where the person creating the trust (the grantor) transfers their assets into a trust during their lifetime. The grantor appoints a trustee, who manages and distributes the assets according to the grantor's wishes. The difference between a living trust and a will is that a will only takes effect upon the death of the testator, while a living trust takes effect as soon as it is created.
One of the primary advantages of a living trust is that it can help avoid probate, which is a legal process that occurs after a person's death to distribute their estate to their heirs. Probate can be expensive and time-consuming, so avoiding it can save time and money. Furthermore, a living trust can provide flexibility and privacy, as the terms of the trust are not a matter of public record like a will.
However, creating a living trust can have some limitations or exceptions. For example, a living trust does not provide protection against creditors, nor does it offer any tax benefits over a will. Additionally, transferring assets into a living trust can be costly, as it requires re-titling assets and transferring ownership.
If you are considering creating a living trust, it is important to consult with an experienced attorney who can advise you on the best course of action for your particular situation. They can also help you create a comprehensive estate plan that takes into account your specific goals and needs.
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