When you set up a living trust to transfer your property to your loved ones (your beneficiaries) after your death, you’ll save them a lot of time, hassle, and probably money. You could instead use a will, but wills must go through probate—the court process that oversees the transfer of your property to your beneficiaries.
Probate proceedings can mean that your loved ones wait months or even years to get the property and that a portion of your assets will be spent on court costs and lawyers' fees. In comparison, when you leave property using a trust, your beneficiaries can access it much more quickly, and often without the need for an attorney.
What Is a Trust?
A trust is an arrangement under which one person, a trustee, manages property for a beneficiary. There are many different kinds of trusts, but one common type is the revocable living trust, which is often used (like a will) to leave property to loved ones after death.
What Is the Purpose of a Living Trust?
Many people make a living trust to leave property to their loved ones after they die. A will can accomplish this purpose as well, but it won't avoid probate, while a living trust has the added advantage of saving your beneficiaries from having to deal with the costs and delays of probate. A living trust also offers flexibility; for example, you can arrange for someone to manage your children's inheritance until they become adults, or reach an age (such as 25 or 30) of your choosing.
Who Needs a Living Trust?
In the long run, a living trust will be more efficient for your beneficiaries than a will, but the work at the front end—setting up the trust—is more involved and expensive than writing a will. And the fact is, not everyone needs a trust.
If you’re unsure whether your circumstances make the added work and cost of setting up a living trust worthwhile, ask yourself these questions:
- Is your estate (the total value of everything you will leave behind) small enough to avoid probate anyway? Avoiding probate is one of the main reasons for establishing a living trust, but you might already be poised to bypass probate if your estate is considered “small” by your state. Some states offer a simplified version of probate for modest estates or allow them to skip probate altogether. (See Quick and Easy Probate Options for Small Estates.) In some states, it's possible to qualify as a "small" estate even if you have significant assets because some states don't count certain types of property, such as pay-on-death bank accounts or real estate owned in certain ways.
- Are you a married person whose assets will go automatically to your spouse? If you're married and hold major assets (such as your home, bank accounts, and stocks) in joint ownership with your spouse, then upon one spouse’s death, this property might simply transfer to the surviving spouse without the need for probate. (A seamless transfer like this might also hold true for jointly owned property between non-spouses, depending on your state’s laws.) If the bulk of your property avoids probate in this way, you could reasonably decide that creating a will to cover any remaining property is sufficient for your needs.
- Are you relatively young and healthy? If you’re in good health and in your 30s or 40s, creating a simple will to name a few beneficiaries, as well as a guardian to care for your children, might be enough for now. Of course, you could be young and healthy but have a complex financial situation that bolsters the case for a living trust. But if your financial situation is straightforward, you might want to wait until later in life—when possessions and complications have accumulated—to create a living trust.
- Do you own real estate in more than one state? If so, you might have extra reason to avoid probate, because those managing your affairs will likely need to file a separate proceeding in each of those states. A living trust can help you transfer your real estate without initiating multiple probate proceedings. (As an alternative to a living trust, a transfer-on-death deed might accomplish your goals, if it's available in each state where you own real estate.)
- Are you in debt or worried about creditors? If you're likely to have debts when you die, you might want to consider a will over a living trust, because the probate process includes a cut-off period for creditors. After that period has passed, your beneficiaries can be confident that the property they inherit is free of claims.
Pros and Cons of a Living Trust (vs. a Will)
The main advantages of using a living trust are:
- probate avoidance (and the time and cost savings that come with avoiding probate)
- flexibility in managing property on behalf of a beneficiary (for example, if you don't want a beneficiary to get all of the property at once)
- help during periods of incapacity (because a successor trustee is named to manage things if you're ever incapacitated), and
- privacy (wills are submitted to probate court and become part of the public record).
It's also harder to challenge a living trust than a will (though will challenges are already rare).
The main disadvantage of a living trust versus a will is the larger initial investment of time and money to set up a trust. When setting up a trust, you'll also have to take the additional step of retitling any property with title documents (such as real estate) so that it's owned by the trust rather than by you as an individual. (See below.)
How Does a Living Trust Work?
The “living” in “living trust” means that you establish the trust while you're still alive, and the trust takes effect immediately. (In contrast, some types of trusts don't take effect until you die.) Typically, you would create a revocable living trust, which you can modify or revoke at any time until death. While you’re alive, you also retain full control over your trust and the property in it—you act as the “trustee” of the trust.
In your trust document, you name a successor trustee to take over and manage the trust (or distribute your property to your beneficiaries) after you die or become incapacitated. If you're married and make a shared living trust with your spouse, the successor trustee takes over after both of you have died or become incapacitated. In either case, no probate proceedings are necessary.
One of the most important steps in making a trust is funding your trust. Even if you were to create a legally valid trust, it will be of little use to you unless you’ve transferred property to it. Think of the trust as an empty container; you still have to specify what property will be placed and held in it. This step can be as easy as listing your property in your trust document, but for certain types of property, such as real estate, you'll have to take additional steps to make it official, such as filing a new deed with the land records office in the county where you own real estate.
How Do You Make a Living Trust?
Living trusts tend to be slightly more complicated to set up than wills. There aren't many steps to creating a trust. A lawyer or a simple software program can easily walk you through the process.
Make Decisions About How Your Trust Will Work
Before you or your lawyer creates the trust, you’ll first have to decide exactly how you want your trust to function. You’ll need to be able to answer these questions:
- Will you make the trust as an individual or with someone else? Married couples often create a joint living trust, place their shared property in it, and act as co-trustees. You can also make an individual trust, of which you're the sole trustee.
- Who will you name as your successor trustee? Who will take over the trust and distribute its property when you die? If you create a joint trust with your spouse or partner, usually your spouse will become the sole trustee once you die or become incapacitated, and vice versa; a successor trustee will take over only upon the death or incapacitation of the surviving spouse. The successor trustee should be someone you trust and who also has the ability to manage your trust.
- Who will receive which property? Maybe you’ll leave everything to one beneficiary, or maybe you’ll divide your assets among many. If you want to leave property to a minor, you’ll also need to name an adult to manage that property at least until the child becomes an adult.
- What property will you place in the trust? If your goal is to avoid probate, you’ll want to transfer to your trust any valuable property that's subject to probate. Note that some assets, like retirement accounts, aren’t subject to probate, so long as you’ve named beneficiaries for the accounts; the assets will go directly to the beneficiaries upon your death. These non-probate assets generally don’t need to be placed in your trust. (Learn more about assets that automatically avoid probate.)
Make the Trust Document
Once you have a plan, you can make your living trust by creating a legal document called a “Declaration of Trust.” This document sets out who will be the trustees of the trust, who will be the successor trustees, and which beneficiaries will receive which property upon your death.
The trust document can also set up more complicated arrangements, such as giving beneficiaries control of different amounts of property when they reach certain ages or, as discussed above, naming someone to manage the property on behalf of children. An attachment to the Declaration of Trust—usually called a schedule—will list the trust property.
Sign the Trust Document and Have It Notarized
To finalize the trust document, you (and any co-trustees) will sign it, date it, and have your signature notarized. You’ll need to bring a photo ID to a notary public and pay a small fee (around $15-25) for the notarization.
Fund the Trust by Changing the Title on Your Assets as Needed
You’re not done yet! Even though you’ve listed out all the property you want to include in your trust, some types of property won't actually be transferred to your trust unless you change the title to the property. This includes real estate, bank accounts, stocks, bonds, mutual funds, business interests, and royalties.
If you want to include your home in your trust, you’ll need to create and file a new deed transferring ownership from yourself to your trust.
How Much Does It Cost to Make a Living Trust?
Many people use lawyers to create living trusts. Some estate planning lawyers charge an hourly rate, while others offer a flat fee for creating your estate planning documents. See a survey of our readers on how much estate planning attorneys charge to create estate planning documents.
If your situation is uncomplicated, you can also make a simple living trust yourself, using a reputable service such as Nolo's Quicken WillMaker & Trust. The cost will be much lower than hiring a lawyer.
Can a Living Trust Reduce Estate Taxes?
A living trust can help you avoid probate, but not federal or state estate taxes. However, most people don't need to worry about estate taxes. In 2026, the federal estate tax applies to your estate only if you die leaving behind more than $15 million. Some states do impose a state estate tax at a lower threshold.
If you're interested in reducing estate taxes, you might want to create a different type of trust, known as an irrevocable trust. As the name suggests, once you make an irrevocable trust, you can't revoke or change it. Some types of irrevocable trusts also require you to relinquish total control by designating someone else (besides yourself) to manage it, even while you're still alive. Irrevocable trusts can offer attractive benefits, such as saving on estate taxes.
Because there are no take-backs on an irrevocable living trust, you shouldn't create one lightly. An irrevocable trust is a complicated creature. You'll definitely want to consult an experienced estate planning attorney if you're at all considering an irrevocable trust.
Does a Living Trust Need a Tax ID Number (or EIN)?
While you're alive, you won't need to get a special tax ID number for your revocable living trust. You'll continue to pay taxes as an individual. But after your death, when the revocable trust becomes irrevocable, the successor trustee will need to obtain a separate tax ID number for your trust. This number is called the EIN (Employer Identification Number). The successor trustee will need the EIN to pay taxes for the trust, or even just to open a bank account in the name of the trust.
The one exception to this rule is if you leave everything to your spouse. In that case, your spouse can use their own Social Security Number (SSN).
Will You Still Need a Will?
Even after you've made a living trust, you'll still likely want to create a very simple will as a backup. This way, if you've acquired property after making your trust and either forgotten or haven't gotten around to transferring the property to your trust, you're still covered, and intestacy laws (see below) won't kick in. This backup will is usually very simple and states where any leftover property should go.
Another simple type of will that's often used alongside a living trust is a pour-over will, which states that any property that isn't in your trust will be transferred to your trust.
If you have minor children, you'll need a will for an additional reason: to name a guardian for your children. This can't be done through a living trust; it can be done only through a will.
What Happens If You Don't Have a Living Trust or a Will?
If you die without a will or a trust, your state's “intestacy laws” will determine who gets your property. Typically, your spouse and/or children are first in line, followed by parents, and then siblings. (See What Happens When You Don't Have a Will?) Few people are happy with the idea of state law making these decisions for them, so they take control with a will or trust.
Getting Started With a Living Trust
If you're ready to make a living trust, you can hire an estate planning attorney to help. You also can create your own simple living trust (and will) using Nolo's Quicken WillMaker & Trust.