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What is a living trust?

A living trust is also commonly referred to as a revocable trust. It can be an estate planning tool that can help your loved ones avoid the hassles and costs of probate after you pass on.

Living trusts are not the same as a will. If assets are transferred into a trust, there could be a savings of thousands of dollars in legal and probate fees, as well as months where a will is stuck in probate.

A living trust allows the grantor -- which is the person who created the trusts -- to manage the assets. The trust can be revised until the grantor passes away.

You might be surprised about some of the other facts about this type of trust. These facts include:

-- Don't put every asset into a revocable trust. An example could be life insurance policies and pay-on-death bank accounts. However, if your child is listed as a primary beneficiary on your life insurance policy and is not considered to be of legal age when you die, then he or she will need a guardian named. If the trust is listed as the beneficiary, then you get to dictate when and how the money is given to your child.

-- A trust is private because it does not have to go through probate. A will is public, though, and anyone who wants a copy of the will can get it from the court.

-- Creating a trust will not get you out of creating a will. A pour-over will is used to tell the courts where the grantor's assets need to be distributed. If you have minor children, a will is needed to name a guardian.

-- A living trust does not eliminate or reduce state estate or inheritance taxes.

-- The fees charged by executors for assets in a trust are generally less than those that charged by executors for assets listed in a will.

These are just five facts about living trusts that you might not have known. Experienced attorneys can help you understand which estate planning tools are best for you and your family.

Source: Bankrate, "6 surprising facts about a living revocable trust," Judy Martel, accessed May 13, 2016

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