Revocable Living Trust
How a living trust avoids probate, what it doesn't do (reduce taxes), and why an unfunded trust is worthless.
Key facts
- Assets titled to a revocable trust bypass probate and remain private — trusts are generally not filed with a court.
- A revocable trust does not reduce estate or income taxes: the IRS includes revocable transfers in your gross estate.
- A trust only controls assets actually retitled into it. An unfunded trust accomplishes nothing.
What it is
A revocable living trust is a legal container you create during your lifetime. You typically serve as your own trustee, keep full control of the assets, and can amend or revoke the trust at any time. At your death, a successor trustee you named distributes or manages the assets under the trust's terms — without court involvement.
Trust law is state law; most states have adopted a version of the Uniform Trust Code, which standardizes creation, modification, and trustee duties.
What it does well
Probate avoidance: assets titled to the trust pass directly under its terms, skipping the court-supervised probate process — useful especially if you own real estate in more than one state, which would otherwise require a separate (ancillary) probate in each.
Incapacity management: if you become unable to manage your affairs, your successor trustee steps in over trust assets immediately, without a court-appointed conservatorship.
Privacy: a will becomes a public court record at probate; a trust generally does not.
What it does not do
It does not save taxes. For income tax, a revocable trust is a "grantor trust" — its income is reported on your personal return. For estate tax, the IRS includes property you transferred but retained the power to revoke in your gross estate, so a revocable trust changes nothing about the estate-tax math.
It does not protect assets from your creditors during your lifetime, because you retain full control. And it does not replace a will: a "pour-over" will is still needed to catch assets left outside the trust and to nominate guardians for minor children.
Funding is the whole game
A trust only governs assets actually titled to it. Real estate needs a new deed, bank and brokerage accounts need to be retitled, and business interests need assignments. Signing a trust document and never funding it is one of the most common — and most expensive — estate planning mistakes: everything left outside still goes through probate.
References
This guide is educational only and is not legal, tax, or investment advice. Laws vary by state and change over time; confirm current figures with the linked primary sources or a licensed professional in your state.
Related guides
Last Will & Testament
What a will actually controls, what makes one legally valid, and what happens if you die without one.
Probate & Beneficiary Designations
What probate actually involves, which assets skip it automatically, and why beneficiary forms override your will.
Estate & Gift Taxes in 2026
The federal exemption is $15 million per person. The numbers that matter, portability, and the state-level layer.
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