Last Updated on 21, March 2014
A Living Trust is a trust setup when the settlor (the person who setup the trust) is still alive. A testamentary trust is a trust setup by a Will and after the testator dies. Note that a testamentary trust is only setup after the Grant of Probate and when all debts are paid by the Executor. If the estate is insolvent after all debts are paid, the testamentary trust is as good as an empty shell. Therefore, if protection from creditors’ claim is important, a living irrevocable trust is required. Both testamentary trust and living trust are known as expressed trust.
An implicit trust is created when for example monies are given to minors. Since minors cannot legally own assets, an implicit trust is created. Many Wills written create such implicit trust. Implicit trust is not bad by itself but those who DIY their own Will or engage incompetent Will writers and lawyers may not fully understood the implication of creating an implicit trust.
Do note that transfer of property to a living trust incurs a hefty 3% stamp duty (at this point of writing). On the other hand, transfer of property to a testamentary trust only incurs $10 stamp duty.
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