What Is a Living Trust?

Whether you've examined your options for passing along your wealth or not, you probably know there are several possibilities when it comes to managing your wealth and handing it down to the next generation. About 20% of Americans use living trusts as part of their estate plans, and it's a sensible option for many retirees. Keep reading to learn more about living trusts and whether it's right for you.

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A clipboard with living trust and estate planning written on the paperwork it's holding. — Image source: Getty Images.

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First, it allows your descendants or beneficiaries to avoid probate court, which can be a time-consuming process. By avoiding using a will, a living trust can also protect your and your family's privacy. A will, on the other hand, becomes public record once it enters probate, so anyone can read it. A living trust can keep the distribution of your assets and the beneficiaries private.

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Probate

Probate is a court-supervised process of administering a deceased person's estate. Learn about how probate works and how to avoid it.

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The trust's revocable nature also allows you to make changes as needed or even revoke it if you decide it no longer suits your needs. A living trust also makes it easy for someone else to manage your assets if you become incapacitated, avoiding the need for a court-appointed guardian or conservator.

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What Is Estate Planning?

Who needs an estate plan? Basically everyone. Here are eight steps to creating one.

Retirement Planning: How to Map Out Your Financial Success

Learn how, why, and how much to save for your golden years.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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