A trust established for the benefit of a third party during the grantor's lifetime is referred to as what?

A trust established for the benefit of a third party during the grantor's lifetime is known as a living trust. This type of trust becomes effective while the grantor is still alive, allowing them to manage their assets and provide for beneficiaries directly without the need for probate upon their death. A living trust can serve various purposes, including asset management, providing for dependents, and facilitating the swift transfer of assets.

In this context, here's how the other types of trusts differentiate from a living trust: an irrevocable trust, once established, cannot be easily altered or terminated by the grantor, meaning that the grantor relinquishes control over assets placed in that trust. A testamentary trust, on the other hand, is created through a will and only takes effect after the grantor's death, limiting its benefit to posthumous asset distribution. A charitable trust is designed specifically for charitable purposes, benefiting a charitable organization or community rather than a third party for personal benefit. Thus, living trust is the most fitting option for describing a trust that operates during the life of the grantor, providing flexibility and control.