A revocable living trust is the most popular estate planning trust because it offers significant benefits while maintaining complete control during your lifetime. Understanding how these trusts work helps you decide if one belongs in your estate plan.
What Is a Revocable Living Trust?
A revocable living trust is a trust you create during your lifetime that you can change or cancel at any time. You typically serve as grantor, trustee, and beneficiary—maintaining complete control over trust assets just as if they were in your own name.
Upon your death, the trust becomes irrevocable and transfers assets to your beneficiaries according to your instructions—without going through probate.
Primary Benefit: Probate Avoidance
The main advantage of revocable living trusts is avoiding probate. Assets in the trust pass directly to beneficiaries without court involvement. This saves time (probate can take months to years), saves money (court costs and attorney fees), and maintains privacy (probate proceedings are public record).
If you own real estate in multiple states, trusts avoid probate in each state—which would otherwise require separate proceedings.
How They Work
Step 1: Create the trust document specifying terms, beneficiaries, and successor trustees. Step 2: Fund the trust by transferring ownership of assets into the trust. Step 3: Manage assets as trustee during your lifetime. Step 4: Successor trustee distributes assets upon your death according to trust instructions.
Funding the Trust
A trust only works if you actually transfer assets into it. Funding means changing title of assets from your name to the trust's name. Real estate requires new deeds. Bank accounts are retitled. Investment accounts are transferred.
An unfunded trust is useless—assets in your name still go through probate. Funding is the step most people neglect.
What Assets to Include
Commonly transferred assets include real estate, bank accounts, brokerage accounts, business interests, and valuable personal property. Don't transfer retirement accounts or life insurance—use beneficiary designations instead. Certain assets like vehicles are often left out due to minimal probate complications.
Maintaining Control
Because revocable living trusts are revocable, you maintain complete control during your lifetime. You can buy, sell, or mortgage trust property. You can change beneficiaries. You can dissolve the trust entirely. For tax purposes, the trust doesn't exist—you report all income on your personal return.
Successor Trustees
You name a successor trustee to take over when you die or become incapacitated. Choose someone trustworthy who can handle financial responsibilities. Many people name family members; others use professional trustees like banks or trust companies.
The successor trustee manages assets during incapacity and distributes them after death—no court involvement needed.
Incapacity Planning
Revocable living trusts provide seamless management if you become incapacitated. Your successor trustee steps in without court proceedings. Compare this to assets in your name alone, which might require guardianship or conservatorship proceedings.
What Trusts Don't Do
Revocable living trusts don't protect assets from creditors—you still control the assets, so creditors can reach them. They don't save estate taxes—assets are still part of your taxable estate. They don't eliminate the need for a will—you still need a "pour-over will" for assets outside the trust.
Costs and Maintenance
Creating a revocable living trust costs more than a simple will—typically $1,500-$3,000+ for attorney-drafted trusts. Maintenance is needed as you acquire new assets (they must be added to the trust) and as life circumstances change.
Is a Revocable Trust Right for You?
Consider a revocable living trust if you own real estate (especially in multiple states), value privacy, want to avoid probate costs and delays, or want seamless incapacity planning. Simple estates with modest assets may not need the complexity.
Getting Legal Help
Estate planning attorneys ensure your trust is properly drafted and funded. DIY trusts often have errors or remain unfunded. Professional guidance ensures your trust actually accomplishes your goals.