Living Trust

Well, a regular ol’ trust is a legal vehicle into which assets are placed so that their distribution - or rather who gets what from them when the owner of that trust dies...is legally clear. Why does this matter? Like, at all? Sounds like a lot of paperwork for, more or less, uh... the privilege to pay lawyers.

Well, if you don't have clarity as to who gets what when you die, the government often has the right to tax the crap out of whatever you have left... in the form of filtering it through what is called probate. Probate is basically a process of figuring out if, in fact, your will is your will, and if you are, in fact, um…Will.

So a living Trust is one that lives, uh...while you do. When you die, it gets distributed. And beyond reducing taxes and giving clarity as to how your dearly departed spirit wants its assets distributed a living trust also can adjust to your moods. Living Trusts are revocable, which means you can change your mind and revoke it, i.e. take it back.

After you die, it becomes irrevocable, unless you can legitimately send your spirit back from the dead and convince a judge to let a lawyer amend it. Your living trust basically comprises 3 sets of people you are trusting, in the form of bringing them inside your financial tent.

The first player is you. That is, you are a separate party in this party, and it is you who creates the trust and divines who gets what, when, and how. You can name yourself (and potentially your spouse) as trustees. That means that, until you die, at least, you are in charge.

Then your spouse, if you have one, is in charge and after you go, the likely successor trustees are your kids. So yeah, the second player is the trustee, the person in charge of your assets after you die - and it’s their job to be sure that your assets are disposed of the way you want them to be.

The trustee also deals with conflicts, defending the wishes in your trust the way that person presumes you’d want them defended.

Example: Your loving spouse. The 5th one. The one who actually loved you for you.

And third, there are the beneficiaries, the ones who get the 1.3 million dollars in proceeds from the sale of your mansion in Palo Alto. Yeah, this one. They’re the ones who get the house, the custom Range Rover with the pure gold rims and passenger side ejector seat.

And all of this is done, in large part, so that your heirs don't have to go through probate, which saves a ton of time and money (your heirs don't have to live in their cars while your assets wend their way through government processes) and the will does not have to get filed publicly, which means that, even after you are dead, you can maintain privacy.

Generally, the more assets you have, the more important it is to have a living trust. If you have bupkis, it uh...probably doesn't matter.