What is a living trust?

How it works

A living trust (also called an inter vivos trust) has three roles, which one person can fill at first:

• Grantor (settlor or trustor) — the person who creates the trust and puts property into it.
• Trustee — the person who manages the property. The grantor normally serves as initial trustee.
• Beneficiary — the person who benefits. During life, the grantor is the beneficiary; after death, the people named in the trust are.

The trust document also names a successor trustee — a family member, friend or professional — who takes over at death or incapacity.

Revocable vs. irrevocable

Most living trusts used for estate planning are revocable: the grantor can change or cancel them at any time. For tax purposes, the trust is ignored during the grantor's life; income is reported on the grantor's own return under their Social Security number. At death, the trust becomes irrevocable. Irrevocable living trusts are separate tools used for tax, asset-protection or Medicaid planning.

Funding the trust

A trust controls only property actually transferred into it. Funding means retitling assets in the trustee's name — for example, “Jane Smith, Trustee of the Jane Smith Revocable Trust dated May 1, 2026.” That includes signing and recording a new deed for real estate, changing ownership of bank and brokerage accounts, and assigning personal property. Retirement accounts are usually not retitled; instead the trust or individuals are named as beneficiaries, following tax advice. An unfunded trust is the most common living-trust mistake: the property still goes through probate.

Advantages

• Avoids probate for trust assets, saving time and often money, especially in states with expensive or slow probate such as California.
• Privacy — a trust is generally not filed in court, unlike a probated will.
• Incapacity planning — the successor trustee can manage assets without a court conservatorship.
• Property in several states — avoids separate probate proceedings in each.
• Control after death — the trust can hold property for young beneficiaries, pay it out over time, or provide for a spouse and then children.

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Disadvantages and myths

• Cost and effort up front — drafting fees are higher than for a will, and funding takes work.
• No tax savings by itself — a revocable trust does not reduce estate or income tax.
• No creditor protection — during life, the grantor's creditors can reach revocable trust assets, and after death they often can too.
• Not a Medicaid shield — revocable trust assets count for Medicaid eligibility.
• Still need a will — a “pour-over” will catches property left outside the trust and names guardians for minor children.

After the grantor dies

The successor trustee gathers trust assets, obtains an employer identification number for the now-irrevocable trust, notifies beneficiaries as state law requires, pays debts, expenses and taxes, and distributes property or continues to manage it under the trust terms. The trustee owes fiduciary duties of loyalty, prudence and impartiality and must keep beneficiaries reasonably informed. Most trust administrations take a few months to a year, without court supervision unless a dispute arises.

Living trust vs. will

Both direct who gets property, but a will works only through probate and takes effect at death, while a funded trust avoids probate and works during incapacity. Many people with a home and moderate savings, especially in high-cost probate states or with property in more than one state, choose a trust. Those with few assets, or assets that already pass by beneficiary designation, may do fine with a will.

Getting one

An estate planning attorney typically charges a flat fee of roughly $1,500 to $5,000 for a trust-based plan, including the pour-over will, powers of attorney and health care documents. Ask whether the fee includes preparing and recording the deed and help with funding accounts.

Finally, keep the trust current: when you buy new property or open new accounts, title them in the trust's name or name the trust as beneficiary, and review the successor trustee choice every few years.