Living Trust

AAA

DEFINITION of 'Living Trust'

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Alimony Substitution Trust

    A trust agreement in which a divorced person agrees to pay spousal ...
  2. Trust Fund

    A trust fund is a fund comprised of a variety of assets intended ...
  3. Testamentary Trust

    A legal and fiduciary relationship created through explicit instructions ...
  4. Inter-Vivos Trust

    A fiduciary relationship used in estate planning that is created ...
  5. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  6. Will

    A legally enforceable declaration of how a person wishes his ...
Related Articles
  1. Taxes

    Tax-Efficient Wealth Transfer

    Taxpayers with large taxable estates were required to take steps to reduce them before 2011.
  2. Retirement

    Why You Should Draft A Will

    Don't trust the courts to follow your wishes - plan the distribution of your own assets.
  3. Options & Futures

    Getting Started On Your Estate Plan

    With some preparation, you can save your heirs from paying a hefty estate tax. Here are some tips.
  4. Options & Futures

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  5. Professionals

    Tips for Spreading the Wealth to Relatives

    There are many ways that your clients can move money or other assets to relatives in order to reduce their tax bills. Here's a primer on best practices.
  6. Professionals

    Tips for Handling Client Inheritance

    When clients leave or receive an inheritance, be prepared to deal with much more than mere paperwork or financial transactions.
  7. Professionals

    Advice on Dealing with Unequal Inheritances

    When it comes to inheritances, the concept of equal versus equitable can be hard to navigate, even when all parties are reasonable.
  8. Professionals

    Top Tips for Family Wealth Transfers

    Essential tips for tackling family wealth transfers.
  9. Professionals

    Estate Planning Tips for Financial Advisors

    Estate planning is not a set-it-and-forget-it proposition. Here are some tips for you and your clients.
  10. Personal Finance

    What's an Irrevocable Trust?

    In an irrevocable trust, the grantor gives up the right to revise, amend or terminate the trust without the permission of the beneficiary. An irrevocable trust is best used as an estate-planning ...

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center