Living Trusts

Both probates and living trusts are means by which to transfer property to ones heirs. Probate uses the court system. A will is submitted to the probate court and the court supervises the process whereby the terms of the will are carried out and legal title to property is transferred to the heirs.

A living trust replaces the need for utilizing the court system to legally transfer assets to the heirs because the ownership of assets is transferred into the name of a trust before the person dies. A successor trustee distributes property to heirs in accordance with the trust document.

The grantor is the person who places his or her property in a trust. A living trust, as the name suggests, begins functioning while the grantor is alive and holds all the person's property. Since the individual has no property in his or her individual name upon death, the need for court supervision to transfer legal title is eliminated. Instead, legal title is transferred from the trust estate to the heirs according to the terms of the trust document and through the filing of legal documents necessary to reflect changes in ownership.

The main motivation for a living trust is to save probate costs and minimize probate inefficiencies. A living trust offers a greater degree of privacy and protection from claims by dissatisfied heirs. A living trust is also a means of planning for a time when an individual is no longer capable - or simply no longer desires - to meet the responsibilities of attending to their personal financial affairs. Thus, a living trust is a component of not only "estate planning" (after a person passes away) but also of "incapacity planning."