How it works
You sign the trust, usually serve as your own trustee, and move assets in. While you have capacity, you can amend it or revoke it.
The house is the usual first transfer. You name a successor trustee, the person who takes over when you die or can no longer manage your affairs.
What it does well
Assets titled in the trust pass to the successor trustee without a probate case, including when you cannot manage them yourself.
- Skips probate for funded assets. Probate is the court process that settles an estate. Assets titled in the trust pass outside it.
- Covers incapacity. If you cannot manage your affairs, your successor trustee can step in for the trust assets without a court guardianship.
- Keeps details private. A will that goes through probate becomes a public court record. Trust administration usually happens outside court.
- Handles property in two states. A cabin or rental titled in the trust can avoid a second probate in the other state.
What it does not do
A revocable living trust does not cut income tax or estate tax, does not shield assets from your creditors, and does not name a guardian.
- Income tax and estate tax stay on your return. See trusts and taxes.
- You can revoke it, so the law treats the assets as yours for creditors.
- It does not control assets you never moved into it, or accounts that pass by beneficiary designation.
- A guardian for minor children is named in a will.
Why it comes with a pour-over will
A pour-over will sends leftover assets into the trust so one set of instructions covers them.
Almost everyone leaves something outside the trust. Assets that pour over may still pass through probate first, which is why funding matters.
The trust is the plan. The funding list is what makes the plan work.
Trust or will?
Use the living trust when you own a home and want that home to skip probate. Use a will when you mainly need a guardian named.
If you rent, own little property, and mainly need a guardian named, a will may be enough. If you carry a large life policy or a business that may grow, and your net worth is $5M or more, start with the counsel desk.
The best trust types for families shortlist compares this trust with the irrevocable types. If you own the house and have children, will or living trust for a house and two children puts the guardian statutes next to the trust statutes.