Living trusts allow the person funding it — called the settlor — to establish a trust while he is still alive. Technically called an inter vivos trust, living trusts function much like other types of trusts and allow for one or more people to be named as beneficiaries.
Parts of a Trust
Trusts allow a settlor to set aside assets, either liquid assets like cash or fixed assets like property, under the general custody of a trust manager for the benefit of its recipients, called beneficiaries. A trust requires a trust agreement and the proper filing of related legal documents according to the specific requirements of state law. Those appointed to manage the trust on behalf of the settlor are called trustees.
Living Trust Requirements
Living trusts function like other trusts. However, because the settlors are still alive, they have the option to modify or rescind the trust, if such provision exists under state law and the original trust agreement.
By definition, a trust has one or more beneficiaries who profit from the trust according to the parameters of the trust agreement. Each beneficiary can benefit equally, or the trust can set aside different benefits for different recipients.
Beneficiaries are entitled to obtain information about the trust and to ensure the trustees are behaving in a responsible manner. However, beneficiaries are generally limited the information that applies to them specifically and not to any benefits assigned to other beneficiaries.