A living trust is simply a written agreement designating someone to be responsible for managing your property. It is called a living trust because this agreement becomes effective while you are still alive. In order to better understand what this agreement entails, we have to understand the three key roles of a living trust. The first role is that of the grantor. The grantor is the trust maker or the person who determines what the trust document will say. The grantor is also the person who retitles his or her assets into the name of the trust. This retitling of assets is called “funding the trust.” These retitled assets will be distributed under the terms of the trust. The second role is that of the trustee. The trustee is the trust manager or the person who ensures that the trust assets are used and distributed according to the terms of the trust and in the best interests of the beneficiaries. The final role is that of the beneficiary. The beneficiary is the one who uses and enjoys the trust assets. In order to better understand these concepts, let’s use an illustration with an imaginary family we will call the “Wilsons.” The Wilson family is made up of three people—the husband Alfred, the wife Betty, and their young daughter Candice (A, B, and C). Let’s also assume that Alfred has an older brother David. Alfred and Betty want to set up a living trust to ensure that Candice will be cared for if something were to happen to them. Under the guidance of an attorney, Alfred and Betty create the trust, determine the terms of the trust, and fund the trust with their money and property. Therefore, Alfred and Betty are the grantors of this trust. Alfred and Betty also name themselves as co-trustees of their trust, so they also manage the trust assets according to the terms of the trust. In addition, Alfred and Betty are also the beneficiaries of the trust because they are the ones who currently use and enjoy the trust assets. Now, let’s assume that Alfred and Betty are in an accident that leaves both of them disabled. Alfred and Betty are still the grantors because they are the original creators of the trust. However, let’s assume that because of their disability they are no longer able to manage their own assets. We look to the trust document and discover that Alfred and Betty named Alfred’s brother David as successor trustee. A successor trustee is one who can step in as a substitute for the original trustee when he or she cannot fulfill the trustee duties. In this case, David becomes the substitute trustee because Alfred and Betty’s disabilities prevent them from managing the assets of the trust. However, because Alfred and Betty are still alive, they are still the beneficiaries of the trust. Therefore, David manages the trust assets according to the trust terms for the benefit of Alfred and Betty. Finally, let’s assume that Alfred and Betty pass away. Even though they passed away, Alfred and Betty are still the ones who created the trust document and are therefore still the grantors of the trust. As successor trustee, David steps in to manage the trust assets just like he did when Alfred and Betty were disabled. But who is the beneficiary of the trust now that Alfred and Betty are gone? We look to the trust document and discover that Candice is named as the beneficiary if Alfred and Betty were to pass away. However, the trust document states that Candice will not get full control of the assets until she is 25 years old. Therefore, David will manage the trust assets as trustee for the benefit of Candice until she reaches 25 years old. This example illustrates one reason why families choose to draft a living trust—namely, that it provides a contingency plan for times of disability or death. A living trust is one of the smoothest ways to ensure that your loved ones will have access to your assets and accounts when the unexpected occurs.