Revocable living trust

What it means

The person who creates it is usually also the trustee and the beneficiary while alive: they keep using their own property exactly as before.

On death, the successor trustee named in the document takes over and distributes according to it, without a court.

Revocable means it can be undone. Because of that, the property is still treated as the creator's own for tax purposes and is still reachable by their creditors.

Why it matters

It avoids probate for whatever is actually in it — and only for that. A trust document with an unfunded trust behind it accomplishes very little.

It also provides continuity if the creator loses capacity: the successor trustee can act without a court, which a will cannot do.

When you are likely to meet it

• When a parent mentions having a trust.
• When deciding between a will and a trust.
• When a house or account has to be retitled into a trust's name.

A will and a living trust

Not alternatives. Almost everybody with a trust also has a will.

An unfunded trust accomplishes very little, and fails silently — everything looks in order until somebody dies.

How this varies by state

How a trust is created and administered, and what a trustee must report to beneficiaries, are set by state law.

Related terms

• Certificate of trustA short document proving a trust exists and what the trustee may do, without revealing its terms.
• Due-on-sale clauseA mortgage term letting the lender demand the whole balance if the property changes hands — with exceptions that cover inheritance.
• Funding a trustActually moving property into a trust — retitling accounts and deeds into its name. An unfunded trust generally does not control assets that were never transferred into it.
• Governing instrumentWhichever document actually controls an asset — a will, a trust, a beneficiary form, a deed, a partnership agreement.
• GrantorThe person who creates a trust and puts property into it.
• Irrevocable trustA trust that generally cannot be changed or undone once created. Giving up control is the point of it.
• Legal and equitable titleOwnership split in two: one person holds the property, another holds the benefit of it.
• Non-probate assetSomething that passes to a new owner automatically, without a court.
• PortabilityA surviving spouse's right to use whatever federal estate tax exclusion their spouse did not — but only if it is claimed.
• Postnuptial agreementThe same kind of agreement, made by a couple who are already married.
• Pour-over willA short will used alongside a living trust, directing anything left outside the trust into it.
• Prenuptial agreementA written agreement signed before a marriage that changes some of the financial and property rules the marriage would otherwise bring with it.
• ProbateThe court process that confirms who has authority to deal with what somebody owned when they died.
• Successor trusteeThe person who takes over a trust when the original trustee dies, resigns, or can no longer serve.
• Testamentary trustA trust created by a will, coming into existence only when the person dies.
• Transfer-on-death deedA recorded deed naming who receives real property on death, with no probate and no present interest for the person named.
• TrusteeThe person or institution that holds and manages trust property for the people it is meant to benefit.
• WillA written document saying who should receive what, and who should be in charge of seeing that it happens.

Sahvelo guidance that uses this

• Wills and trusts
• Trusts after a death