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What is a Living Trust?
A living trust allows the settlor or grantor, the person making the trust, to transfer all or part of the settlor's property to the trust so it does not have to pass through probate after the settlor's death and can instead be directly distributed to the beneficiaries.

A living or inter vivos trust is created while the settlor is still alive. The settlor typically serves as trustee while alive and names a successor trustee in the trust document to serve upon the settlor's incapacity or death. The settlor can change the beneficiaries of the trust or terminate the trust during the settlor's lifetime.



A living trust may be written to terminate upon the settlor's death, at which time the trustee distributes the trust property to the beneficiaries. However, a living trust may also be written to continue for the benefit of the settlor's spouse or children after the settlor's death and terminate at a later date.

Our site provides a free estate planning form to help you create and fund a living trust. To print a copy, go to Living Trust Checklist.


Do I Really Need a Living Trust?
Living trusts have been the subject of criticism in recent years as expensive and unnecessary. This is due in part to the actions of living trust mills. Living trust mills have misrepresented the advantages of living trusts for some individuals. Living trust mills primarily target seniors. Some states have taken steps to simplify their probate proceedings to make it easier and less expensive. See state laws.

Nevertheless, probate is a process that takes much more time than transferring assets to beneficiaries of a living trust. Even in states where the probate process has been simplified, probate can take longer than one year. Also, if privacy of the person making the trust is a concern and the goal is to avoid disclosure of the amount of assets owned by the deceased and inherited by his heirs, a living trust may be the best option.

Not everyone needs a living trust. Trusts are estate planning devices that greatly benefit some families, but are unnecessary for others. Do your research to learn what type of estate plan is recommended in your situation. If you have a small estate and the costs of creating a living trust are an issue, talk to a lawyer about the probate laws in your state and your individual estate planning concerns. There may be alternative methods you should use, such as non-probate transfers that allow you to avoid probate without making a living trust.


Can I Change or Revoke My Living Trust?
A living trust may be revocable or irrevocable. A revocable living trust becomes irrevocable upon the settlor's death. With an irrevocable living trust, the settlor cannot revoke the trust after it is made and cannot rescind the terms or any transfer of property to the trust. See irrevocable trusts.

If you want to keep your living trust in effect, but want to make a few simple changes, such as changing who will inherit from the trust or removing property from the trust, there is a process for making these types of changes without creating a whole new trust. See codicils and amendments.

For details on how to change the person that will receive trust property, go to change trust beneficiary.

For a list of steps involved in transferring property out of a living trust and instructions on how to document the trust revocation, see how to revoke a living trust.



Advantages of Living Trusts
A living trust has several advantages over a will, including the following:

1. A living trust allows property to be quickly transferred to beneficiaries upon the settlor’s death rather than waiting for probate to be completed.

2. A living trust is usually less expensive to administer than a will because the executor does not have to hire a probate lawyer or spend time on the probate process.

3. A living trust protects the privacy of the settlor and the settlor's family, because the contents of the living trust are not made public at the settlor’s death, unlike when a will is probated.

4. If the person making the trust owns real estate in more than one state, the real estate can be transferred to the living trust, eliminating the need for probate in multiple states. See Ancillary Probate.

5. A living trust allows a trustee to manage the assets of the trust for the settlor in the event of his or her disability or incapacity, which can eliminate the need for conservatorships.

6. If disgruntled heirs are a concern, a living trust may be a better estate planning method than a will because it is more difficult to successfully contest a living trust. See No Contest Clauses.


Do I Need a Will If I Have a Living Trust?
A living trust is not a substitute for a will. If you create a living trust, you still need a will to provide for the distribution of any property you own at your death that was not transferred to the living trust. The type of will that is usually used with a living trust is called a pour-over will. To learn more about pour-over wills, go to types of wills.

If you want to disinherit a spouse, child or other heir, you cannot fully disinherit a person by making a living trust. To disinherit someone, you also need to make a will. See disinheriting an heir.


Disadvantages of Living Trusts
Living trusts are one of the most talked about strategies in estate planning, but they are not for everyone. In fact, if the total size of your estate is below a certain dollar amount, you probably do not need a living trust. What that dollar amount is depends on factors such as the probate laws of the state where you are domiciled, the probate laws of the states where you own property, and whether certain federal and state tax laws will impact your estate or your spouse's estate. See estate taxes.

Living trusts have several disadvantages, including:

1. Making a living trust is more expensive than making a basic will.

2. There are added costs to funding and maintaining a living trust, especially if you acquire or sell property frequently or experience life changes such as marriage, divorce, and changes in heirs or beneficiaries.

3. Depending on where you live, you may be able to achieve some of the same estate planning objectives of a living trust by using other types of non-probate transfers, such as POD bank accounts, transfer on death deeds, etc. To learn more, go to Non-Probate Transfers.

4. Living trusts do not offer some of the advantages of other types of estate planning trusts. See other types of trusts.

As you weigh the benefits of a living trust versus the costs of making and maintaining it, keep in mind the only person that can properly advise you on whether you need a living trust is an attorney familiar with your circumstances and your estate planning goals. Because many lawyers offer a free consultation, it is relatively easy to find out whether you need to make a living trust or should simply rely on a will or non-probate transfers to carry out your estate plan.


Free Living Trust Guide
Making a living trust is a big investment. It is not something you will personally get to enjoy, but rather is a gift you will be giving to those you leave behind. You may decide it is important to make a living trust for your legacy, to help build wealth for future generations or merely to lessen the burden on the person left with the task of administering your estate.

Whatever your reason for being interested in living trusts, there are many different steps in the process of selecting an estate planning trust and making one. To make it easier to learn whether a living trust is right for you, Pennyborn.com offers a free living trust guide that answers many of the most frequently asked questions about living trusts. To browse the guide, go to Guide to Living Trusts.


How to End a Trust
If you have decided you no longer want a living trust as part of your estate plan, you will need to complete the process of ending your living trust. For a list of the steps involved, see How to End a Trust.


Estate Planning and Trust Administration

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