Final answer:
A trust established during a settlor's lifetime is referred to as a living trust or inter vivos trust. It allows seamless asset management and distribution without the need for probate court, ensuring privacy and efficiency. Without such estate planning, assets will be distributed by the state according to intestacy laws.
Step-by-step explanation:
A trust that is established during the settlor's lifetime is known as a living trust or inter vivos trust. This estate planning tool allows for the management and distribution of the settlor's assets during their life and after death. Unlike a will, a living trust avoids probate court, ensuring privacy and potentially reducing the time and expenses involved in distributing the assets.
If a person passes away without a will or trust, they are considered to have died intestate. In such cases, the distribution of assets is handled through the court system according to the state's intestacy laws, which determine the hierarchy of beneficiaries, including the deceased's spouse, children, and other relatives.
The importance of establishing a trust can be underscored by historical figures, such as the one who left their assets in trust to S. G. Shippard and the Secretary for the Colonies, illustrating the timeless utility of trusts in estate planning.