Are a Trust and Estate the Same?
Frequently Asked Questions | FAQs
No, a trust and estate are technically two separate entities. An estate includes all assets owned by a person when the individual dies. Your estate represents your money, property, car, furniture and business. Your estate also includes outstanding debts. If you die before you pay your debts, the executor of your estate needs to pay the debtors out of the estate funds before distributing assets to your beneficiaries. An appointed administrator of the estate first needs to obtain an employer identification number.
A living trust is a legal document that takes the place of a simple will. However, in a living trust, the grantor, who is typically the creator of the trust, grants a trustee or trustees specified assets. The trustees do not own the assets. Instead, they hold the assets for the beneficiary or beneficiaries. A revocable living trust means that the grantor has the right to revoke the trust.
A person who has set up a living trust holds checking accounts, savings accounts and properties in the trust. After the person dies, the assets that were previously held in the trust are distributed to the beneficiaries. The existence of a trust means that probate is not required. However, the executor must apply for an EIN number.
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