A living trust is created when the trust holder is alive and prevents the property in the trust from going into probate, notes Nolo. It lowers the estate tax that the beneficiaries have to pay and serves as a form of long-term property management.Continue Reading
Even if a person sets up a living trust, it's recommended that he also create a will, according to Nolo. Any property that the trust holder obtains after creating his living trust may not be included on that trust before he dies. However, the unlisted property doesn't have to go through the probate process if it's listed on a will.
Anything that is not listed in a living trust or will goes to the deceased's closest relatives, notes Nolo. State law selects these relatives, and they may or may not be the people that the deceased intended to inherit his property.
Creating a living trust is usually more financially sound than going through probate, according to LegalZoom. Should the estate go through probate, the cost of the process is deducted from the estate, even if the will is uncontested. Living wills are also more likely to hold up better in court should they ever be contested.Learn more about Financial Planning