What is the difference between a Living Trust and a Testamentary Trust?
A Living Trust is a trust created and funded during the Trustor’s (sometimes called Grantor or Settlor) lifetime which is typically for the benefit of the Trustor during Trustor’s lifetime and then provides for other beneficiaries after the death of the Trustor. The primary purpose of a Living Trust is usually to avoid the probate process but a Living Trust can be created to plan for many other purposes. If the purposes of the Living Trust is to avoid probate, all property must be owned and titled to the Trustee during Trustor’s lifetime or probate will still likely be required for property not titled to the Trustee. When a Will is probated, the property of the decedent is distributed at that time but a Living Trust also allows for property to be held and managed beyond the decedent’s death thus giving control beyond the grave for a period defined in the Living Trust (with limits).
A Testamentary Trust is a trust which is included in a Will and which is created and funded after death. Testamentary Trusts can be used to plan for most things a Living Trust can be used for other than avoiding probate. The benefit of a Testamentary Trust is that the Trustor does not have to worry about having all of their property titled to the Trustee, which is very abstract to most people. If the purpose of creating a trust is to protect assets for children, plan for a special needs family member, or tax planning, these, among other things, can be usually be done in a Testamentary Trust without the need to manage a trust during a person’s lifetime.
If you would like to discuss how a Living Trust or Testamentary Trust can benefit you, please contact the Law Office of Roy Neal Linnartz, PLLC at 830-625-9300.