Living Trusts

TIPS FOR SENIORS ON LIVING TRUSTS 

Prepared by the National Consumer Law Center, November 2001. For more information on this and other topics, visit their website at www.nclc.org. 

Many seniors worry about what will happen to their property after they pass away. This is a very important decision. Unfortunately, it can also be very confusing.
 
One of the most critical choices you will face is whether to get a living trust, will, or both. There are many unscrupulous companies that will try to convince you that a living trust is the best way to go. This may be true for some. But for many, a living trust will simply be a waste of precious resources.
This fact sheet will give you basic information about living trusts and wills, and describes some of the most common scams. 

UNDERSTANDING THE TERMS 

• TRUST 
  A trust is a legal arrangement where one person (known as the "trustee") controls property given by another person (known as the "grantor" or "trustor") for the benefit of someone else (known as a "beneficiary"). Although it is not a requirement, with most living trusts, the grantors are also the trustees during their lifetimes, as long as they remain competent. 
  
• LIVING TRUST 
  The term "living" refers to the fact that these trusts take effect while the grantor is still alive. In order for this to happen, grantors must transfer their property and assets into the trust. Under most living trust arrangements, grantors, while still competent, are free to change the terms of the trust. A living trust is different from a living will. Living wills are documents that express your wishes about being kept alive if you become terminally ill or seriously incapacitated. 
  
• WILL 
  A will is a legal document that gives direction about how you want to distribute your property after death. It does not take effect until your death. 
  
• PROBATE 
  Probate is the legal process that usually involves filing a deceased person's will with the local probate court, taking inventory of the person's property, paying all legal debts, and eventually distributing the remaining assets and property. If the person died without a will (this is called intestacy), the estate still must be probated and property will be distributed according to state law.

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