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The Life of a Simple Living Trust

Posted on August 10, 2020 in Firm News

A living trust is created when, generally, one person signs a written trust document and titles at least one asset in the name of the trust.


In order for a living trust to exist, it must have assets titled in its name. A trust will die without assets.

Living Trust:

The term “living trust” is used because it is created during the lifetime of its creator. The term also, generally, means that the trust can be changed or revoked during the lifetime of its creator. Once a creator of the trust dies, it is irrevocable as to any instructions he has given in the trust.

Parties to the Living Trust:

The individuals who create the trust are called the “trustors.”

Typically, the trustors are also the individuals who fund the trust with their own assets, and so, trustors can also be called “grantors” or “settlors.” When you transfer title to another person, you are the “grantor”, and the other person is the “grantee.”

If the trustor/grantor/settlor is also in charge of the trust, he or she, is then, also called the “Trustee”, but this term can be used to describe any individual or legal entity, such as a bank, who is in charge of a trust. A settlor, for example, can appoint a bank as his trustee, or his daughter, or his spouse. If a grantor forgets to appoint a trustee, or if the trustee dies, the court will appoint a replacement trustee. As already mentioned, a trust dies if it is not funded, but it will not die if it does not have a trustee.


The main purpose of a living trust is to allow the grantors to pass on their assets to their beneficiaries without the need to go through the public court system, called the “probate process.” It is useful to understand that a trust is very much like a will, which instructs the executor how to divide assets upon the death of the creator of the will, called the “testator.” While the will must, generally, go through the probate process of the state where the testator died, a trust is generally exempted from that process. The ability to skip probate court not only saves time and legal fees, it also keeps the distribution of assets private. The only people who will know who the beneficiaries of a trust are is the trustee and the beneficiaries of the trust. The courts and the general public need never know. If beneficiaries of a trust disagree about whether the trust is valid, or is a forgery, or think there is something wrong with the trust was written, they can bring this to the probate court. This will, however, cause the private nature of the trust to be lost.

How it Works:

One easy way to understand how a living trust works is to think of a banks safe deposit box. When the creators of the trust sign the trust, it is like they have opened a safe deposit box at the bank. During their lifetime, they can put in or take out of the box (the trust) any of their assets. (For tax purposes, there may be some items you would not want to put into the trust, such as a 401(k), but that is a different topic). If they buy a house, for example, they can deed the house into the trust, or using our example, put the deed to the house into the safe deposit box. They can do the same with money, titling their bank accounts in the name of the trust, or, again, using the safe deposit box analogy, simply put cash into the safe deposit box. When the settlors/trustees die, the contents of the box is given to the person they leave in charge of the trust. This person is called the “successor trustee.” It is his job to read the trust and follow its instructions regarding who is to receive the assets of the trust, i.e., the contents of the safe deposit box. This is a serious legal duty that courts will punish severely if done improperly.

End of the Trust:

As stated earlier, a trust dies when it has no assets. Therefore, a trust can die if it is never funded, or when all its assets are removed by the trustees. This can happen during the life of the trustees, or at their death when the successor trustee distributes everything to the beneficiaries. With that said, trusts can go on living for years after the death of the original trustees. Oftentimes this happens when parents die leaving young children, in which case the trust may continue to provide income and care for the children even well into their adulthood.