What characterizes a living trust?

A living trust is characterized by being created during a person's lifetime, which allows individuals to manage their assets while they are alive and facilitate the transition of those assets upon their death. This type of trust is beneficial because it can help avoid probate, providing a more streamlined process for transferring assets to beneficiaries. Additionally, a living trust can be altered or revoked at the grantor's discretion as long as they are competent, which adds flexibility to estate planning.

The other options do not accurately describe a living trust. A trust established after death pertains to testamentary trusts, which take effect only once the individual is deceased. A court-appointed arrangement for minors typically involves guardianship or conservatorship, which is unrelated to the concept of a trust. Finally, a financial incentive for care providers does not pertain to the nature or function of a living trust, as it focuses on compensation or payment structures rather than estate planning tools.