What is a living trust?

A living trust is a legal arrangement that lets you decide how your assets are managed and distributed, both during your lifetime and after you die.

How does a living trust work?

A living trust “owns” the property you put into it, while often still letting you control the trust assets. Then, when you pass away, the assets in your trust will pass on to the people you want to receive them.

When you create a trust, you’re known as a grantor. To create a trust, you’ll outline your wishes in your trust documents. You’ll also nominate a trustee to manage the trust, and name beneficiaries who will receive your assets after you pass away. Then, you’ll “fund” the trust by transferring your assets to it. You can put most types of assets into a living trust as long as they have value, like your home, your bank account, and your stock portfolio.

Because a living trust is set up during your lifetime, you may have the option to appoint yourself as the initial trustee. This lets you maintain control of the trust’s assets during your lifetime. If you do this, you also need to name a successor trustee. This person will manage the trust if you become incapacitated (meaning you’re unable to manage your trust yourself) or when you die.

Unlike assets in a will, trust assets don’t have to go through probate. Instead, trust assets are transferred directly to your beneficiaries according to the terms of your trust. Since trust assets don’t have to go through probate, information about your assets and beneficiaries remains private.

Learn more about the differences between trusts and wills — and how to choose which one is right for you.

Maintaining a living trust

Another difference between wills and trusts is that trusts require more ongoing maintenance than wills. Once you make a will, you should revisit it every three to five years to keep it up to date. You’ll likely need to revisit your trust more often. In most cases, when you acquire new property, you should transfer it to your trust. This could involve re-titling the property deed in the name of the trust or filling out a simple transfer form. If you don’t, the property will have to go through the probate process after you pass away.

You should also consider creating what’s called a “pour-over will” alongside your trust. A pour-over will works in partnership with your living trust by “catching” any property you didn't transfer to your trust during your lifetime. This lets your local court know that you want these assets included in your trust after you die.  

Benefits of a living trust

Living trusts offer several benefits, including:

• Protecting your assets during your lifetime. In your trust documents, you can include instructions for how you want your estate managed if you become incapacitated. You can include instructions for distributing assets to loved ones, paying bills, and filing taxes. If you fall ill, you can also specify whether or not trust funds should be used for your care.
• Avoiding probate. Unlike assets in a will, assets in a trust don’t have to go through the lengthy, expensive, and public probate process.
• Protecting your and your loved ones’ privacy. During probate, the details about your estate become public — including information about your beneficiaries. Because trust assets aren’t subject to probate, this information remains private.
• Giving you flexibility and control. A trust gives you greater control over how and when your assets are distributed to your beneficiaries. For example, if your minor child is your beneficiary, you might want trust assets passed to them only when they reach a certain age or for a specific purpose (like buying their first house or going to college). This can help ensure they don’t spend their entire inheritance irresponsibly or all at once.

Learn more about the benefits of a living trust.

Types of living trusts

There are several different types of living trusts, but they all fall under one of two categories: revocable trusts and irrevocable trusts.

Revocable living trusts (or RLTs) are the most common type of trust. RLTs are flexible and allow you to change your trust at any point during your lifetime. You can add or remove assets, change beneficiaries, edit your instructions, and even cancel — or “revoke” — the trust entirely.

Irrevocable living trusts are less flexible than RLTs. While you (as the grantor) can easily change an RLT, an irrevocable trust often requires court approval before changes can be made. The benefit is that irrevocable trusts offer protection from certain creditors and estate taxes that RLTs don’t.

When you pass away, your revocable trust becomes an irrevocable trust.

Learn more about the differences between revocable and irrevocable living trusts.

Who needs a living trust?

A will meets the needs of most Americans, but a living trust may be right for you if:

• You own a business. Transferring business assets to a trust removes them from your personal estate. This gives the trust ownership of your business interests, while letting you keep any powers outlined in your company’s operating agreement, like voting rights.
• You own property in multiple states. If you own property in multiple states, you’ll have to go through what’s called ancillary probate (or “secondary probate”) in each state where you aren’t a resident. With a trust, out-of-state property will automatically transfer to your beneficiaries without having to pass through ancillary probate.
• You want to minimize or avoid estate tax. The 2025 federal estate tax exemption is $13.99 million (though your state’s exemption may be lower). If your property is held in an irrevocable trust, it may reduce the amount of estate tax your estate owes — so more of your wealth can pass on to your loved ones.

How to create a living trust

If you have a complex estate or lots of questions, you may want to work with an estate planning attorney to set up your living trust.

If you have a simple estate and straightforward wishes, you also have the option to create a living trust online. If you’re a California resident, you can make an RLT using FreeWill's revocable living trust tool.

While the process can vary from state to state, you’ll generally take the following steps to create a living trust:

1. Choose the type of trust you want to create. There are many different types of trusts to choose from. You’ll want to start by deciding whether you want your trust to be revocable or irrevocable. From there, you can choose a trust that will best fit your estate planning goals. Many Americans choose to make a revocable living trust (RLT).
2. Decide on your trust terms. These are the rules or instructions you want to set for your trust. In them, you’ll outline how you want your trust and the assets it holds managed during your lifetime and after you pass away.
3. Choose a trustee. This is the person who will manage your trust. If you name yourself as trustee, you’ll need to name a successor trustee to take over the role if you become unable to or when you pass away.
4. Name beneficiaries. This is who will receive your assets according to the terms of your trust. Beneficiaries can be family members, friends, or even a charitable organization close to your heart.
5. Create your trust documents. Once you’ve made these key decisions, you’ll need to write them into your official trust documents. You can create these with the help of an estate lawyer or by using a self-help online platform like FreeWill.
6. Execute your trust documents. Your trust isn’t considered legally binding until you execute your trust documents according to your state’s  laws. This could mean signing your documents with witnesses or having them notarized.
7. Fund your trust. Once the trust is created, you’ll need to fund it by transferring your assets to it. If you don’t transfer your assets, they won’t be included in your trust.
8. Consider making a pour-over will. Even if you create a trust, it’s still a good idea to have a will as well. With a pour-over will, you can name legal guardians for your minor children and provide for any pets you leave behind. You can also specify that any assets you haven’t transferred into your trust by the time you pass away should be transferred into it. Keep in mind that these assets will have to go through the probate process for the transfer to take place.

Frequently asked questions

How much does a living trust cost?

The cost of a living trust can vary. You may be able to use an online estate-planning platform like FreeWill to affordably create your trust. Individuals with larger or more complex estates may want to enlist the help of a lawyer, which could quickly become expensive. Specific costs will depend on where you live or if you hire an estate attorney to help create or manage your trust documents.

Depending on the type of trust you have and the state you live in, there may be other fees involved in creating and maintaining a trust, like:

• Title transfer fees for real estate or vehicles
• Taxes on income generated by trust assets (like stocks)
• Paying the trustee to manage the trust

You can create and update your revocable living trust using FreeWill.

Can you change or cancel a living trust?

If you have an RLT, you can change or cancel your trust at any point during your lifetime. If you have an irrevocable trust, making changes or canceling the trust is more complex, and often requires approval from either a court or your beneficiaries.

Learn more about amending your living trust.

Can a living trust be contested?

Yes, but it isn’t common.

Your successor trustee can usually distribute the property in your trust without involving the court. But court proceedings may still be necessary in certain cases. For example, a loved one may contact the court to ask questions or raise concerns about your trust documents.

Are living trusts public record?

In most cases, the details about your living trust remain private. This includes the terms of the trust, the assets it holds, and the beneficiaries you named to receive these assets.

If a living trust is legally challenged in court, however, its details may become public.

Are living trusts valid in all states?

Yes! You can create a living trust in all 50 states and Washington, D.C. It’s important to understand your state’s laws and requirements before creating a trust. If you have questions, an estate attorney can help.

Is property placed in a living trust subject to probate?

No, any assets transferred to your trust won’t have to go through the probate process. Instead, they’ll be distributed directly to your beneficiaries according to your trust documents.

However, any assets that you don’t transfer to your trust during your lifetime will be subject to probate. That’s why it’s important to promptly transfer any new property you receive into your trust. Having a pour-over will can help ensure that these “forgotten” assets are transferred to your trust after you pass away, but they’ll still have to go through probate first.

Do you have to pay estate taxes on a living trust?

If your total estate is valued above the federal or state tax exemption, it may be subject to estate tax. Most Americans won’t be impacted by estate tax — the 2025 federal estate tax exemption is $13.99 million for individuals, and the majority of states don’t have an additional estate tax.

Whether or not your trust assets are subject to estate tax will depend on the type of trust you have. Assets in a revocable trust will have to pay estate tax, while assets in an irrevocable trust generally won’t.

If reducing or avoiding estate tax is important to you, an estate attorney can help you understand your options and what type of trust will be best for your needs.

Is a living trust right for you?

While a last will and testament meets the needs of most Americans, a living trust may be right for you if you have a more complex estate, complicated family dynamics, or own property in multiple states. It’s also a great option if you want your assets to avoid probate and protect your loved ones’ privacy after you pass away. Learn more about the differences between a will and a trust — and how to decide which one is right for you.

If you're interested in making a trust, consider creating a revocable living trust with FreeWill.

Keep Learning

• Living Trusts Vs Wills
• Revocable Trusts, Explained
• Grantors, Explained
• Trustees, Explained