Revocable Living Trust: Definition, How Living Trusts Work

Revocable living trusts, often called living trusts, are important estate planning tools.
Connor Emmert
Kay Bell
Tiffany Lam-Balfour
By Tiffany Lam-Balfour,  Kay Bell and  Connor Emmert 
Edited by Tina Orem

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A revocable living trust, also frequently called a living trust or revocable trust, is a legal document in which you allow a trustee to manage designated assets for you and your beneficiaries during your lifetime

Cornell Law School. Living will. Accessed Jun 29, 2023.
. The trust is changeable and can provide more privacy than a will.

  • A living trust or revocable living trust can help your estate and heirs avoid the hassle and costs of probate. However, a trust cannot designate guardianship for minor children, which is why wills and living trusts are often used together as part of an estate plan.

  • Living trusts or revocable living trusts are trusts established during one’s lifetime, as opposed to testamentary trusts, which are created upon one’s death

    Cornell Law School. Testamentary trust. Accessed Jun 29, 2023.

  • Technically, living trusts can be revocable or irrevocable. However, people often refer to revocable living trusts or revocable trusts simply as “living trusts.”

In this article, the term “living trusts” refers to revocable living trusts.

» What kind of trust works for you? Compare revocable vs. irrevocable trusts

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How to create a living trust

1. Create a trust document

To set up a living trust, the trust creator, called the grantor, legally establishes the trust (often with the help of an estate planning attorney) and authorizes a trustee to administer those assets for the benefit of the trust creator and/or beneficiaries. The trust document lists assets the grantor wishes to include in the trust. It also names a trustee, as well as the heirs or beneficiaries who will receive assets after the grantor dies.

2. Sign and notarize the trust agreement

After the trust is written, it must be signed by the grantor and notarized to make it official.

3. Transfer assets into the trust

The grantor transfers assets — such as bank accounts, investment accounts and real estate — to the trust by retitling the assets in the name of the trust.

Pros and cons of revocable living trusts



  • Protects in case of incapacity.

  • Avoids probate (saves on future probate costs).

  • Preserves privacy.

  • Effective once signed and funded.

  • Less likely to be contested.

  • Generally, takes precedence over wills.

  • More complex and costly process to set up.

  • Does not provide estate tax benefits.

  • Does not protect against creditors

  • Cannot designate guardianship for minor children.

Advantages of revocable living trusts

1. Protection in case of incapacity

A revocable living trust or living trust also allows for smooth transition planning in case the grantor becomes incapacitated.

  • The trust must be created when the ailing person is deemed mentally capable of agreeing to the document, or it won’t be legally binding. 

  • When the person dies or becomes incapable of handling their financial affairs, the successor trustee takes over

    American Bar Association. Revocable Trusts. Accessed Jun 29, 2023.

2. Avoids probate

Probate is the legal process during which a court validates your will and then authorizes your executor to distribute your estate to your beneficiaries as you have instructed. If you die without a will — or intestate, in legal terms — the probate court may use various state guidelines to decide how to distribute your property and to whom.

Trusts, however, typically aren’t subject to probate. If you establish a living trust and transfer assets into the trust, the probate courts likely won’t oversee the distribution of those assets when you die.

3. Helps protect your privacy

In addition to being time-consuming and often expensive, probate proceedings are usually public. However, assets in a living trust and revocable living trusts generally don’t have to go through probate, so they are kept away from prying eyes.

Disadvantages of revocable living trusts

1. Can be expensive to set up

Depending on how complicated your estate plan is, working with financial professionals or lawyers can make living trusts expensive — often more expensive than setting up a will.

2. Process can be time-consuming

After establishing the living trust or revocable living trust, you still have to transfer assets to the trust. Retitling assets can be difficult, especially if you want to put different assets in the trust.

3. No tax advantages

The grantor of a revocable living trust maintains control of the assets in the trust and can “revoke” or change the trust at any time. Therefore, the Internal Revenue Service considers assets in revocable living trusts as still part of the grantor’s estate, which is why revocable living trusts do not provide much relief for income or estate taxes. However, if you’re looking for ways to reduce tax liability, you may want to consider an irrevocable living trust, which in general does remove the grantor’s control over the assets

Special Needs Alliance. A Short Primer on Trusts and Trust Taxation. Accessed Jun 29, 2023.

4. No protection from creditors

Assets in a revocable living trust do not have protection from current or future creditors in the event of your death (but assets in an irrevocable living trust might have creditor protections).

Revocable living trust vs. will

The main difference between a living trust is when they become active and what assets they concern. Trusts tend to deal with specific assets rather than the sum of your personal holdings. You’ll probably still need a will if you set up a trust, especially if you have minor children, as a will is often necessary to determine guardianship.

A pour-over will is a common counterpart to a living trust. This type of will ensures that any assets not already in your trust will automatically transfer over to your living trust after you die.

Frequently asked questions

Not necessarily. You don’t need special licenses to create a trust, though it can be a lot of work depending on your situation and how complicated your estate plan might be. If your estate plan is fairly simple and you have the time, you can write your own living trust; if your assets or family situation is more complex, you may want to consult an estate planning attorney.

No, revocable living trusts typically do not reduce estate taxes. Because the grantor maintains control of a revocable living trust and can change or cancel it at any time, all assets in the trust are still considered owned by the grantor. Therefore, the grantor must report income from the trust on their personal income tax return rather than file a separate tax return for the trust. Irrevocable trusts, on the other hand, remove assets from your taxable estate and therefore may help lower your estate taxes (if you're subject to them in the first place).



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