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FREQUENTLY ASKED QUESTIONS > Estate Planning Questions & Answers > WHAT IS A TRUST?

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A legal document that provides instructions to a personal trustee on how to manage and distribute the estate.  A Living Trust is established during lifetime and is usually revocable and amendable.  It avoids probate and can provide instructions for management of the estate in the event of death or incapacity. 

 

A Testamentary Trust is established as a part of a will, but like a will, is only effective on death and must also be probated.  Special kinds of trusts can be used to provide for children, fund a charitable gift, use life insurance to replace wealth that will be lost to estate taxes, comply with tax law requirements to protect specific parts of the estate for heirs, protect the use of the estate for spouses who are not U.S. citizens, or any other legal purpose that the creator of the trust might wish.

 

When you create a trust, you (Trustmaker) transfer your property into the name of the trust, to be managed by you or someone else that you choose (Trustee) for the benefit of yourself or someone else (Beneficiary).  In a Living Trust you are generally the Trustmaker, Trustee and Beneficiary to begin with so that you retain total management and control over your assets.  However, at the time of your death, if the trust is then the owner of everything in the estate, there is nothing to probate and that process is avoided.  Your Successor Trustee simply follows your instructions for further managing and distributing your estate. 

 

A revocable Living Trust does not require any special or additional tax filings, and can generally be revoked or amended at any time.