          
          
          
          The Living Trust:
          
          
               A large number of trusts are created in the last
          will and testament (a "testamentary trust") of a
          deceased person, usually with the objective of
          providing for a spouse and heirs.  This is a
          traditional use of the trust, but its popularity
          overlooks the great advantages of a living trust, one
          created while the grantor is still alive.
               In order to create a trust other than by a will,
          the grantor must sign a written "declaration" or
          "indenture" which gives specific details of the trust
          objectives, operation and income distribution, both
          during the grantor's life and afterward.  The 
          declaration is the charter for all the trust purposes,
          powers and procedures, and as such, the drafting and
          content of this basic document is of the utmost
          importance.
               Among other things, the trust declaration should
          define how the trustee is to invest the property,
          provide instructions for payment or accumulation of
          income earned by the trust, name and define the rights
          and benefits of the beneficiaries, set a duration for
          trust existence and distribution of property when it is
          to end, and define the relationship of the grantor to
          the trust and the trustee.
               Decades of federal and state judicial decisions
          and U.S. Internal Revenue Service rulings interpreting
          trust documents by now have given every phrase special
          meaning, therefore the writing of the trust declaration
          requires expert advice, assistance and coordination. 
          This is especially true because to be successful, a
          trust must be integrated fully with all other estate
          planning and legal arrangements the grantor may make.
               A living trust is just what the term suggests; a
          trust created while the grantor is alive, also known as
          an "inter vivos trust."  In contrast to the delayed
          establishment of a testamentary trust, a living trust
          is created by the grantor to take effect and operate
          immediately.
               Typically a living trust provides for income for
          the beneficiaries during their lives, usually a grantor
          husband and his wife, and the disposition of the trust
          assets at the grantor's death, customarily to their
          heirs.  The major benefit in a simple living trust is
          that upon the grantor's death, or the later death of
          the surviving spouse, trust assets avoid probate
          completely, title passing immediately to the named
          beneficiaries.  There are also the secondary benefits
          of lifetime income and asset protection which a trust
          affords. 
               In creating a revocable living trust, a grantor
          voluntarily transfers title to his or her assets, but
          with a "string" attached.  When a trust is "revocable,"
          the grantor retains power during his or her lifetime to
          vary the trust terms, withdraw assets, or even end the
          trust entirely by formal revocation.  Such a trust
          offers only limited asset protection, especially if the
          grantor is also the beneficiary during life, a cozy
          arrangement often challenged successfully by creditors.
          
          
          
