A living trust is a trust established during a person's lifetime in which his or her assets and property are placed within the trust, usually for the purpose of estate planning. The trust then owns and manages the property it holds through a trustee for the benefit of named beneficiary, usually the creator of the trust (settlor).
The settlor, trustee, and beneficiary may all be the same person. In this way, a person may set up a trust with his or her own assets and maintain complete control and management of the assets by acting as his or her own trustee. Upon the death of the person who created the trust, the property of the trust does not go through probate proceedings, but rather passes according to provisions of the trust as set up by its creator.
Perhaps the biggest advantage of a living trust is that it does not have to go through probate, as does a will. However, there are other estate planning devices which avoid probate, such as a joint tenancy, a life insurance policy, and others.
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Legal Definitions Taken from USLEGAL.com