Revocable Living Trusts Explained
The most powerful tool in estate planning for middle-class and affluent families alike. A Revocable Living Trust is a legal entity you create to hold your assets while you're alive, which transfers them privately when you die.
Why "Revocable"?
Because you retain complete control. You can change the terms, add or remove assets, or dissolve the trust entirely at any point during your lifetime as long as you are mentally competent. For tax purposes, the IRS treats the trust as an extension of you; you file taxes using your own SSN.
The Primary Benefit: Probate Avoidance
Assets titled in the name of your trust do not go through probate. When you die, your named Successor Trustee immediately steps in and distributes the assets according to your instructions. No court fees, no 12-month delays, no public record.
| Feature | Will | Living Trust |
|---|---|---|
| Goes through Probate? | Yes | No |
| Public Record? | Yes | No (Private) |
| Takes effect when? | Only at death | Immediately (Helps in incapacity) |
The Catch: Funding the Trust
A trust only controls what it owns. If you create a trust but forget to re-title your house deed or update your bank accounts to the name of the trust, those assets will still go through probate. This is known as "funding" the trust.