What is a 'Living Trust'
A living trust is a property interest created during a person's life that allows easy transfer of assets without going through the process of probate. A living trust is an agreement where the trustee holds the legal possession of a fund or assets that belong to another person, the beneficiary, and it is created while the person is alive. This is different compared to other types of trusts that are created through the person's will.
Also known as inter-vivos trust.
BREAKING DOWN 'Living Trust'
There are two types of trusts: inter-vivos (living) trusts and testamentary trusts. Testamentary trusts are trusts that are established through a last will and testament, whereas living trusts are created while the person is alive. The advantage of establishing a living trust is that assets do not have to go through probate, which can be costly and take a lot of time.