Estate Planning

Understanding the Living Trust

What is Probate? Probate is the court process to ensure your debts are paid and assets are distributed per your will. Without a will, state law decides how your assets are divided.

Probate is problematic for several reasons:

• It’s expensive: Legal fees, executor fees, and other costs can total 3-8% of your estate’s value.

• It’s time-consuming: The process can take anywhere from 9 months to 2 years, during which time assets are frozen.

• It’s public: Anyone can view what you owned and who you owed, leaving your family’s finances exposed.

• It’s out of your family’s control: The court decides how long probate takes, how much it costs, and what information becomes public.

Why do I need a trust?

How a Living Trust Works

A living trust allows you to control your assets during your life, even if you're incapacitated, and ensures they are distributed according to your wishes after your death.

To set up a living trust, you transfer your assets to the trust’s name. Legally, you no longer "own" anything—the trust does—but you retain control as the trustee. This keeps your assets out of probate and avoids court control if you become incapacitated. It’s a simple, effective way to protect your assets and your family.

A will may not be the best choice for your family. While it outlines how your assets should be distributed, it does not avoid probate, meaning the court must verify it before it can be enforced. Plus, a will only takes effect after your death and offers no protection if you become incapacitated, potentially leaving the court in control of your assets.

The solution? A revocable living trust. It avoids probate, lets you maintain control over your assets while you're alive, and ensures your assets are managed as you wish—even if you become incapacitated or after your death.

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Frequently asked questions

Do I still need a will if I have a living trust?

Yes, having both a living trust and a will is often recommended. While a living trust helps avoid probate and manage your assets during incapacity, a will is necessary for matters that may not be included in your trust (like personal belongings or guardianship of minor children). The will can also direct any assets not transferred to the trust into the trust after your death.

Can I change or revoke my living trust once it's set up?

Yes, a revocable living trust can be changed or revoked at any time while you're alive, as long as you're mentally competent. You can add or remove assets, change beneficiaries, or even dissolve the trust entirely if your needs or wishes change.

Who manages the trust after I die?

When you create a living trust, you appoint a successor trustee—someone you trust to manage the trust after your death or incapacity. This person can be a family member, friend, or a professional trustee (like a bank or trust company).

Are there any tax benefits to a living trust?

A revocable living trust does not provide any immediate tax benefits, as it is considered your property while you're alive. However, it can simplify the estate administration process, potentially reducing estate administration costs and delays. If you want tax-saving benefits, you would need to set up an irrevocable trust or other estate planning tools.

Can a living trust protect my assets from creditors or lawsuits?

No, a revocable living trust does not protect your assets from creditors or lawsuits while you're alive, as you still control the assets. However, once the assets are distributed to your beneficiaries after your death, they may be more protected depending on the type of trust you have and state laws.

Do I need to transfer all of my assets to a living trust?

Yes, for a living trust to be fully effective, you need to transfer your assets—like bank accounts, real estate, investments, and life insurance policies—into the trust’s name. If some assets are left out, they may still need to go through probate. However, items like retirement accounts often need separate planning strategies.