A living trust is a legal document that places possessions of a person (grantor) in trust for the use of other people (beneficiaries). Typical of the types of property placed in living trusts are houses, stocks, or bank accounts. Many people name themselves as the trustee (administrator) of the trust during their lifetimes and name a successor trustee to administer the trust if the grantor no longer wishes to administer the trust, becomes incapacitated, or dies. While a trust is created during a grantor’s lifetime, it may last well beyond the grantor’s death.

Advantages of a Living Trust

Partial Will Substitute

One of the advantages is that a living trust can act as a partial substitute for a will. When all or most of a grantor’s possessions are placed in trust, probate is unnecessary. While the details of a will are subject to public disclosure, a trust’s details are not.

Incapacity / Incompetency

If a grantor should become incapacitated or declared incompetent, a successor trustee administers the trust, free of court supervision. If no living trust exists, then a probate court appoints a conservator to manage the incapacitated person’s assets.

Distributing Assets at Death

At the time of death, a trustee accounts for all the trust’s assets, pays bills, taxes, or claims against the trust’s property, and then distributes the balance according to the trust’s instructions. The trustee does this free of court supervision.

If no living trust exists, the assets will have to be probated. The will is submitted to the probate court. An inventory of the assets is filed with the court and the deceased’s creditors notified. After the executor pays the claims and debts, the balance is distributed to the heirs. However, the time and cost expended in probate is generally greater than that expended in living trust situations.

Establishing a Living Trust

A living trust is a legal document that should be created with care. A person may hire a lawyer to create a living trust or use self-help forms and computer software.

The grantor must decide whether the trust is revocable, meaning he has the right to change or revoke the trust, or irrevocable. A revocable trust usually states that it is irrevocable upon the grantor’s death.

Once the trust document has been signed, property that is to become trust property has to be transferred to the trust. Real estate should be titled and recorded in the trust’s name. Other property such as stocks, bank accounts, should likewise be transferred and titled in the trust’s name. The trust can also be named as a beneficiary of life insurance policies or retirement funds. Since there are serious tax repercussions involving retirement proceeds, a qualified professional should be consulted beforehand.


While creditors may still reach the assets of a living trust at the time of the grantor’s death, a trust is not a public record and may be harder for creditors to track down. However, probate also offers some protection from creditors. Once a will has been filed for probate, the decedent’s creditors are notified. If the creditors fail to make a claim against the estate, their claims will be barred.


A living trust is a legal document that can save time and money in the transfer of assets to others. A trust avoids the publicity of probate. While a person can create a trust on his own, consulting with an attorney may also be advisable.