UK Accounting Glossary
A living trust (also called a grantor trust, or revocable trust, or an inter vivos trust) is an agreement in which the person who established the trust, known as the grantor, transfers the estate to a designated trustee for subsequent management. A living trust is a revocable arrangement, whereby all rights to income and principal can be legally terminated or amended while the grantor is either alive or competent. The inception of a living trust occurs during the grantors lifetime. After his or her death, however, the living trust becomes irrevocable. A living trust is not a way to merely transfer assets. Living trust arrangements are initiated primarily in order to facilitate thorough and systematic management of an estate. Thus the successor of a living trust is typically a carefully chosen trustee. A living trust is also an effective means to forego the probate process that is sometimes associated with a will and help in situations of incompetence. Additionally, a living trust is an estate planning instrument that may help reduce estate taxes (especially for married couples).
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This glossary post was last updated: 10th February 2020.