You have probably heard the term “living trust.” Perhaps you have some vague notion of what it means. But could you explain it to the person sitting next to you? A living trust is an estate planning tool. In essence, it is an alternative to a will. Like a will, its main function is to direct the distribution of your assets after your death.

Imagine this situation: Your adult child has a long-term disability. Maybe it’s a severe mental illness; maybe it’s a serious physical disability. Maybe it’s both. You have significant assets – a house, some successful investments. You are concerned about your disabled child receiving an inheritance when you die.

The American legal system is a useful vehicle for righting people’s wrongs: If your dog bites me and I am seriously injured, I can sue you for medical bills, pain and suffering, etc. That is fair and just. But, our legal system is also overused and abused. Frivolous lawsuits are filed frequently, and sometimes they succeed. You don’t want to be on the losing side of that frivolous lawsuit, especially if you are lucky enough to have assets to lose. So how do you make sure that in our litigious-leaning society, your assets are protected?