Legal Question in Wills and Trusts in Virginia

Decisions like this should not be made on general principles. One of the things that a lawyer does is understand a person's exact circumstances and goals and recommend the best approach for a person's individual situation.

That is why services like LegalZoom are dangerous. They can give a person legal documents that might (hopefully) be legally correct. But they cannot evaluate which method or approach is best for your personal circumstances.

The concept of a trust is actually enormously flexible and broad. Trusts can be used in dozens of different situations. So this brief answer can only be very simplistic.

However, in general, a living trust is a trust that governs one's property during their life.

It is a "living" trust in the sense that it operates while the creator is alive. (It is NOT "living" in the sense of being flexible.)

Compare this to a trust that is set up to be a "pour over" trust from a will. That is funded and activated only upon death. Everything that is left over in the probate of the will is "poured over" into the trust. So the trust only becomes active after death.

Or compare this to a "testamentary trust" which is contained within the will. The will by its explicit terms sets up a trust. That is only created when the will is probated and implemented after death.

But the main PURPOSE of setting up a living trust is USUALLY (remember trusts can be used in lots of different ways) for the purpose of what happens when the creator dies.

So usually what is going on is that a living trust is set up primarily for the purpose of transferring property at death, but with the added flexibility of giving the creator (the "Settlor") access to the money and assets during his or her life.

So the purpose is usually for estate planning at death, but keeping control over the money in case the creator (Settlor) needs to use the property or money before death.

The creator of the trust is both the initial beneficiary and the initial trustee. As soon as the trustee either dies or resigns or is incapacitated, the control of the trust immediately shifts to the next in line named in the trust.

Therefore, no probate or legal process is needed to transfer the property / wealth on death. It is automatic.

The trust controls how the money is used. So, for example, a life insurance policy can be set up to pay life insurance payments into the trust. So if a parent dies and leaves a 14 year old son, the son cannot go out and buy a race car with the money. The trust will control and the trustee will spend the money over time for the son's benefit.

The main disadvantage -- practically -- is the inconvenience and expense of transferring property INTO the trust.

If you set up a trust, NOTHING happens.

You must then take additional steps to transfer property or assets from yourself in your own name, into the trust in the trust's name.

So, for example, to put a house in the trust, one must write a deed from yourself to the trustee and actually transfer the ownership of the house to the trust. Most Counties in Virginia will make you pay a transfer tax just as if you had sold the house to a stranger.

Apart from estate planning, another reason for setting up a LIVING trust during one's life is to protect money from lawsuits or creditors. However, this only works if it is an irrevocable living trust, that cannot be changed by the creator.