What is a revocable living trust?

A trust is a written agreement between you as the person who creates the trust (the settlor or trustor) and the person you designate to manage the trust assets (the trustee). A trust can also be described as a set of instructions issued by you as the settlor to the trustee.

Most people name themselves as the initial trustee. If you become unwilling or unable to serve as trustee, the person or entity you designate in the trust document as successor trustee takes over management of the trust assets. Thus, the successor trustee will manage your trust assets during your incapacity.

The trustee manages the trust estate for the benefit of your beneficiaries, whom you also designate in the trust document. You are the beneficiary of your own trust while you are alive, but in the trust document you also designate which people or organizations are to benefit from or receive the trust assets when you die. In this way, the trust acts as a will substitute. The successor trustee will be in charge of managing and distributing the trust assets on your death in accordance with the terms of the trust.

To make a living trust effective, you must transfer your assets into the trust, which is to say you transfer title to the trustee. In this way, it is clear which assets the trustee has control over and which assets are subject to the terms of the trust. Note that you should not transfer certain assets, such as retirement accounts, into the trust. You and your attorney should agree upon which assets should be used to fund the trust.

Trust assets are not subject to probate.