What is a living trust?

A living trust, often referred to as an inter vivos trust, is indeed created during the lifetime of the grantor. The primary purpose of establishing a living trust is to hold and manage the grantor's assets while they are alive and to ensure a smooth transition of those assets to beneficiaries upon the grantor's death, typically without going through the probate process. This makes it a popular estate planning tool for many individuals.

Establishing a living trust allows the grantor to retain control over the assets while alive and can provide immediate benefits such as management of assets in the event of incapacity. Upon the grantor's death, the living trust can facilitate the transfer of assets to the named beneficiaries according to the terms laid out in the trust document, bypassing the often lengthy and costly probate procedure. This is a significant advantage, as it can help maintain privacy surrounding the distribution of the estate and allows for a quicker transfer.

Other answer options may have some basis in truth but do not accurately reflect the primary and defining characteristics of a living trust. A living trust not only serves to manage assets during the grantor's lifetime but is fundamentally structured around the grantor’s intentions while they are alive, making the timing of its creation a critical aspect of its