Key Takeaways
- A living trust is a legal arrangement you create during your lifetime to hold your assets and pass them to beneficiaries when you die.
- Most living trusts are revocable: you keep full control and can change or cancel the trust at any time.
- Assets in the trust generally pass to your beneficiaries without probate, privately and often faster.
- A trust only works for assets you transfer into it (“funding” the trust).
- A revocable living trust doesn’t reduce income taxes or protect assets from creditors or nursing home costs.
What is a living trust?
A living trust (also called an inter vivos trust) is a trust you set up while you’re alive. You move assets, such as your home, bank accounts and investments, into the trust’s name. A trustee manages those assets for the benefit of the beneficiaries you choose.
With a typical revocable living trust, you play all three roles at first: you’re the person who creates it (the grantor), the trustee who manages it, and the beneficiary who uses the assets. Day to day, little changes. You still live in your home and spend your money.
The trust earns its keep at two moments:
- If you become incapacitated: a successor trustee you named steps in to manage the trust’s assets, without a court guardianship or conservatorship.
- When you die: the successor trustee distributes the assets to your beneficiaries according to the trust’s terms, generally without probate.
Revocable vs. irrevocable trusts
| Revocable living trust | Irrevocable trust | |
|---|---|---|
| Can you change or cancel it? | Yes, anytime while competent | Generally no |
| Who controls the assets | You, as trustee | An independent trustee |
| Avoids probate | Yes, for funded assets | Yes, for funded assets |
| Protects assets from creditors | No | Often, depending on the type and state |
| Reduces estate taxes | No | Can, if designed for it |
| Typical use | Probate avoidance, incapacity planning, privacy | Tax planning, asset protection, Medicaid planning |
When people say “living trust,” they almost always mean a revocable one.
Funding the trust
A trust that owns nothing does nothing. After signing, you must retitle assets into the trust:
- Real estate: sign and record a new deed to the trust
- Bank and brokerage accounts: retitle them, or add the trust as the payable-on-death or transfer-on-death beneficiary
- Personal property: assign it to the trust in writing
- Retirement accounts: usually not retitled; instead, name beneficiaries directly (and sometimes the trust as contingent beneficiary)
Anything left outside the trust may still go through probate. A pour-over will catches those assets and directs them into the trust.
Who benefits from a living trust?
A living trust is often worth it if you:
- Own real estate in more than one state
- Want to keep your estate private
- Live in a state where probate is slow or costly
- Want a smooth handoff if you become incapacitated
- Want to control how and when heirs receive money, for example in stages or for a child with special needs
If your estate is modest and mostly passes through beneficiary designations, a will may be enough. See will vs. trust and how to avoid probate.
Frequently asked questions
Yes, for assets that have been properly transferred into the trust. Assets left in your own name with no beneficiary may still go through probate.
Yes. A pour-over will catches anything outside the trust and is where you nominate guardians for minor children.
No. Because you control a revocable trust, its assets are counted as yours. Long-term care planning usually involves other tools, such as certain irrevocable trusts.
Someone trustworthy, organized and willing, such as an adult child, sibling, close friend or a professional trustee. Name at least one alternate.
A revocable trust is generally ignored for income tax purposes during your life. You report its income on your own tax return using your Social Security number.
Keep reading
- Estate Planning Checklist: The Documents Everyone NeedsA plain-English estate planning checklist: the will, living will, powers of attorney and other documents everyone needs, plus what to organize and when to update.
- What Is a Living Will? How It Works and What to IncludeA living will records your wishes about life-sustaining treatment if you can't speak for yourself. Learn what it covers, when it applies and how it differs from a will.
- Living Will vs. Advance Directive: What’s the Difference?What is an advance directive? It's the umbrella term for your written health care instructions. Learn how living wills, health care proxies and advance directive forms fit together.
- Will vs. Trust: Which Do You Need?Compare a will and a revocable living trust on probate, privacy, cost and control. Learn when a will is enough and when a trust makes sense.
- What Happens If You Die Without a Will?If you die without a will, state intestacy law decides who inherits, who manages your estate and who raises your kids. Here's what typically happens.
- Funeral Planning Checklist: How to Plan AheadA step-by-step funeral planning checklist: burial or cremation, the service, costs, paperwork and how to make sure your family can find your wishes in time.
- How to Avoid Probate: 6 Common StrategiesProbate can be slow, public and costly. Learn six common ways to pass assets directly to your heirs, from beneficiary designations to a living trust.
- How to Choose an Executor for Your Will (and What They Do)Your executor carries out your will. Learn what an executor does, who makes a good choice, and the mistakes to avoid when naming one.
- Pet Trust: How to Provide for Your Pets After You’re GonePets can't inherit money, but a pet trust can fund their care. Learn how pet trusts work, how they compare with a will, and how to choose a caregiver.
- What Is Probate? How the Process Works, Step by StepProbate is the court process for settling an estate. Learn what happens in probate, how long it takes, what it costs, and which assets skip it entirely.
- How to Make a Will: Step-by-Step Guide and Legal RequirementsLearn how to make a valid will: what to include, who can witness it, whether it needs a notary, and the common mistakes that can make a will fail.
- Letter of Instruction: What to Include for Your FamilyA letter of instruction tells your family where everything is and what you want. Learn what to include, how it differs from a will, and where to keep it.
- Digital Estate Planning: What Happens to Your Online AccountsWhat happens to your email, photos, social media and online accounts when you die or become incapacitated? A practical guide to digital estate planning.
- DNR vs. Living Will vs. POLST: What’s the Difference?A living will is your own instructions; a DNR and a POLST are doctor's orders. Learn how each works, who signs it, and which ones emergency responders follow.
- How Much Does a Will Cost? Lawyer vs. Online vs. DIYA simple will can cost nothing or several thousand dollars depending on how you make it. Compare attorney, online and DIY costs, and what's included at each price.
- Do You Need a Lawyer to Make a Will?No state requires a lawyer to make a valid will, and many people can do it themselves. Here's when a DIY or online will works and when an attorney is worth it.
- Last Will vs. Living Will: What’s the Difference?A last will controls your property after death; a living will states your medical wishes while you're alive. Learn how they differ and why most adults need both.
- Executor vs. Trustee: What’s the Difference?An executor settles your estate through probate under your will; a trustee manages assets held in a trust, sometimes for years. Compare their roles, powers and how to choose.
Don’t leave your family guessing
Put your health care wishes in writing with a living will, HIPAA release and medical authorization. The No Brainer Box adds a last will, a revocable trust and health care and financial powers of attorney.
- Answer a few simple questions online
- Download your completed, ready-to-sign forms
- Sign them and keep copies in your account
This guide is general educational information written by the No Brainer Forms Team. It is not legal advice, and No Brainer Forms is not a law firm. Laws and signing requirements vary by state; for advice about your situation, talk to a licensed attorney in your state.