Monday, February 1, 2010
WHAT IS THE DIFFERENCE BETWEEN A LIVING TRUST & A TESTAMENTARY TRUST?
Simply put, a Living Trust is a trust created by you while you are still living.
A Testamentary Trust is created by the court after you have died.
Living Trusts are sometimes referred to in Latin as an Inter Vivos Trust. Living Trusts avoid Probate because they are created and funded when the client is still alive. When the client dies, he or she theoretically do not own their assets because they are owned by their Living Trust.
Testamentary Trusts do not avoid Probate because they are created by the court during the Probate proceedings by enforcing the client's instructions in the client's Will.
The Living Trust is more commonly used by my clients because of the Probate avoidance feature.
Testamentary Trusts are usually employed when the client anticipates a Will Contest or other family problems, and desires that the court enforce the creation of the trust and the appointment of the trustees.
The decision to use a Living Trust vs. a Testamentary Trust should involve legal advice from a qualified Estate Planning Attorney.
If you have any questions, regarding this or other Estate Planning subjects, please visit my website at: http://www.tompkins-law.com
DWIGHT EDWARD TOMPKINS
Attorney at Law
This blog is intended for informational purposes only and should not be considered a substitute for legal advice from a qualified estate planning attorney in your jurisdiction.