Is There a Difference Between a Family Trust and a Living Trust?
We are often asked, “Is there a difference between a Family Trust and a Living Trust?”
The answer is “only slightly.”
A Living Trust is the broad category of trusts that are created while the person who set up the trust is still alive. Under normal circumstances, that person also moves all of his or her possessions, accounts, and property into the name of the trust at the time it is created. But that person will normally still control the trust by being the trustee of the trust that has been created.
The other broad type of trust is called a Testamentary Trust. That is a trust that is described in a Last Will and Testament. But that trust does not actually come into existence, and the property and possessions are not moved into the trust, until the person passes away.
So, what is a Family Trust? A Family Trust is just a Living Trust that names family members (as opposed to charities or unrelated friends) as the primary beneficiaries. They are the ones who receive the property and possessions of the person who created the trust when the trust’s creator passes away.
So, if family members are the major beneficiaries, then the trust will typically be called a Family Trust. If not, it will usually be called a Living Trust.