A trust usually involves three parties: the settlor who is the creator of the trust, the trustee or trustees who agree to manage the assets as directed by the terms of the trust, and the beneficiaries who inherit the assets of the trust. Most settlors name themselves as the trustee in charge of managing their trust's assets. This way, even though the assets have been transferred into the trust, the settlor is still in control of the assets during their lifetime.
Property transferred into a living trust doesn't go through probate. When a property is transferred into a living trust, the trust becomes the owner. Accordingly, for living trusts to work, settlors must diligently transfer ownership of current and future assets into the living trust, otherwise, assets not transferred into the living trust will still be subject to probate.
Upon the settlor's death, the alternative or successor trustee (the person appointed to administer the trust after the settlor's death) simply transfer ownership of the properties to the beneficiaries indicated in the trust. Once all the assets have been distributed to the beneficiaries, the trust ceases to exist.
Stay tuned for more on this topic on our subsequent blog.
*This blog entry was not written by an Attorney and should not be construed as professional legal advice.