A living trust--an inter vivos trust if you want to be formal--allows you to put your assets in
a trust while you're still alive. If your living trust is revocable, as almost all are, it gives you great
flexibility. You or someone in whom you have confidence manages the property, usually for the benefit
of you or your family. Most people name themselves as trustees, and find there is no difference between
managing the trust and managing their own property--they have the right to buy, sell, or give property as
before, though the property is in the trust's name rather than their own.
A living trust is one of the two main ways to avoid probate. (The other is joint tenancy or
survivorship.) One of the purposes of probate is to determine the disposition of the property you leave
at death. Since the trustee of your living trust owns that property, there is no need for probate.
Living trusts have become extremely popular in recent years. Even though they're a useful,
simple, and relatively inexpensive way to plan your estate, they do not magically solve all your problems.
For example, as states have simplified their probate procedures, many of the advantages of
living trusts have diminished. And though they're great for some people, you can't assume they're great
Deciding whether a living trust is right for you depends on the size of your estate, what kinds
of assets it contains, and what plans you have for yourself and your family.
HOW THEY WORK
Requirements for setting up a living trust vary with each state. In general, you execute a
document saying that you're creating a trust to hold property for the benefit of yourself and your family,
or whomever you want it to benefit. Some trust declarations list the major assets (home, investments)
that you're putting in trust; others refer to another document (a schedule) in which you list the exact
property that will begin the trust; or you may simply transfer the property to the trustee under the trust
agreement. In any case, you can add