A Living Trust is one you create while you are alive. One common type of living trust is a revocable living trust often used in place of a regular Last Will and Testament. A living trust is applicable during your lifetime and can benefit both you and your beneficiaries while you’re still alive. A Living Trust allows you to retain control of the assets, and if you should become mentally or physically disabled, your assets can be managed by a successor trustee in accordance with the trust document.
A testamentary trust is only created and used after your death. You can use your Last Will and Testament, Revocable Living Trust, or Irrevocable Life Insurance Trust to create a testamentary trust. Such a trust is commonly used on behalf of minor children, disabled family members or other heirs who may need a trustee that you name to watch over their assets.
Ability to Amend
A Revocable Living Trust is one that can be revoked or changed at any time during your life. You can fund your Trust as needed and make any changes in beneficiaries that you wish. On the other hand, a testamentary trust is irrevocable, meaning it cannot be amended once the trust is established upon your death.
A Living Trust is a way to avoid probate. All property and assets placed in your Trust can pass easily to your loved ones upon your death. Your trust can also serve as a disability plan in case you should become incapacitated. Since your trust can be controlled by a successor trustee in the event that you cannot make decisions for yourself, your entire funded estate easily passes into your trustee’s control who will use it for your benefit. A testamentary trust is used to care take of the needs of another and does not benefit you directly. It also cannot be used to protect you in the event of incapacitation.