A Living trust is a legal instrument that may be revocable by the trust creator or settlor . Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs, time, and maintain privacy . Additionally, living trusts can also be utilized to plan for unforeseen circumstances such as incapacity or disability.

The Parties To The Trust

Grantor/Settlor: The person who sets up the trust; also called the settlor, trustor, or trustmaker.

Trustee: This is the person who will manage the trust assets. This also may be the settlor in a Revocable Living Trust, since the settlor wants to manage his or her own property. Some revocable living trusts are "self settled trusts" (that is, the grantor is also a beneficiary of the trust).

Successor trustee: Where the Grantor is a Trustee, the Successor Trustee is the person who will manage the trust assets when the Grantor dies, or in the event the Grantor becomes incapacitated. Upon the Grantor’s death, the Successor Trustee will immediately have the same powers that the Grantor had as Trustee to buy, sell, borrow, or transfer the assets inside the trust.

The Successor Trustee has the right to distribute the trust’s assets according to the Grantor’s instructions in the trust instrument. The Successor Trustee does not have the legal right to change the trust. The trust becomes irrevocable upon the Grantor’s death. The Successor Trustee has the right to manage the assets in the estate, but must do so for the benefit of the remainder beneficiaries.

At the Grantor’s death, the Successor Trustee automatically takes over without court order, pays any debts, expenses and taxes directed to be paid by the terms of the written trust document, and then distributes the property to the trust beneficiaries. Where the trust is scheduled to terminate on the Grantor’s death, and the trust is merely a means of avoiding probate, the death beneficiary should ordinarily be named Successor Trustee.

Beneficiaries: The people who will receive the benefit of the trust’s assets are called beneficiaries. Sometimes, the grantor is the original beneficiary. Those who take after the grantor's death are "remainder beneficiaries".

Establishing a living trust

To establish a living trust, an individual transfers title of assets from himself as grantor, to a trustee of the trust (often the trustee and grantor are the same person), to administer for the benefit of himself and at least one other person. The trust may also name the remainder beneficiaries who will take over after the grantor dies. In order to transfer a house to the trust, a quit claim deed is executed and recorded. This should not impact property tax evaluation.