What Is a Living Trust?
In plain English
A living trust (also called an inter vivos trust) is a legal arrangement where you transfer ownership of assets to a trust during your lifetime. You typically serve as both the trustee (manager) and beneficiary while alive, maintaining full control. Upon death, a successor trustee distributes assets to named beneficiaries according to the trust terms — bypassing the probate process entirely.
How Does a Living Trust Work?
You create the trust document, name yourself as trustee, and transfer assets — real estate, bank accounts, investments — into the trust's name. During your lifetime, you manage everything exactly as before. The critical difference appears at death: because the trust (not you personally) owns the assets, they pass directly to your beneficiaries through the successor trustee you named, without probate court involvement. This saves time, money, and keeps your estate private.
What Are the Advantages Over a Will?
Living trusts offer several advantages: probate avoidance saves beneficiaries months of court proceedings and thousands in legal fees; privacy (trusts are not public record, unlike probated wills); incapacity planning (your successor trustee can manage assets if you become incapacitated); faster distribution to beneficiaries; and multi-state property simplification (avoiding probate in every state where you own property). For estates over the estate tax exemption, trusts can also provide tax planning benefits.
What Are the Drawbacks of a Living Trust?
Living trusts have some downsides: higher upfront cost than a simple will ($1,500-$5,000+ for attorney preparation); the ongoing effort of retitling assets into the trust (unfunded trusts provide no benefit); no inherent tax advantages for most estates; and they don't eliminate the need for a will entirely (you still need a pour-over will for assets not in the trust). For simple estates with modest assets, a will alone may be sufficient.
Frequently asked questions
Is a living trust the same as a revocable trust?
A living trust can be either revocable or irrevocable. However, when people say 'living trust' they almost always mean a revocable living trust — one you can modify or dissolve at any time during your lifetime. Revocable living trusts are the most common estate planning tool.
Do I still need a will if I have a living trust?
Yes. A 'pour-over will' catches any assets not transferred into the trust during your lifetime and directs them into the trust at death. You also need a will to name guardians for minor children, as trusts cannot do this.
Keep exploring
Related terms
Revocable Trust
A revocable trust is a living trust that you can modify, amend, or dissolve at any time during your lifetime while retaining full control of the assets.
Irrevocable Trust
An irrevocable trust permanently transfers assets out of your estate, providing estate tax benefits, creditor protection, and Medicaid planning advantages.
Probate
Probate is the court-supervised legal process of validating a will, settling debts, and distributing a deceased person's assets to beneficiaries.
Will
A will is a legal document that specifies how your assets should be distributed and who should care for your dependents after your death.
Estate Tax
The federal estate tax applies to the transfer of wealth from a deceased person's estate to heirs when the estate's value exceeds a high exemption threshold. Most estates owe no federal estate tax.