What is the difference between a living trust and a testamentary trust?

A living trust and a testamentary trust are both estate planning tools for managing assets and avoiding certain taxes and fees during the transfer of assets to heirs. In Indiana, the main difference between these two types of trusts is when they go into effect. A living trust is an estate planning tool that goes into effect while the person establishing the trust is still living. It allows them to transfer assets and manage them while they are alive, and the trust dictates where those assets go after they have passed away. A testamentary trust, on the other hand, does not go into effect until after the person establishing the trust has passed away. It is usually included in a will as a way to control how assets are distributed among heirs. It also allows for assets to be distributed over a period of time, so as to not pass too much wealth at one time, and may be used to protect assets from creditors. In summary, a living trust goes into effect while the person who establishes the trust is alive, and a testamentary trust does not go into effect until after they have passed away. Both are estate planning tools to help manage assets and make sure that they are transferred to heirs in a way that is beneficial to them.

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What is the difference between a living trust and a testamentary trust?

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