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Revocable Living Trusts

A Revocable Living Trust, often just called a Living Trust, is an alternative way of planning for your estate that goes beyond the limitations of a Last Will and Testament.  The main limitation of having a Will as the foundation of your estate plan is that, in order for your Will to have any effect, it must pass through the court-supervised process of probate.  Our Problems with Probate page discusses the potential difficulties that can arise in the probate process in more detail.  In summary, these difficulties include costs, time delays, lack of privacy, and (in the worst-case scenario) litigation.   A Revocable Living Trust can provide a way to avoid probate, and the associated difficulties, completely.

What is a revocable living trust?
A Revocable Living Trust is a probate avoidance technique that provides you greater control over the disposition of your property, both during incapacity and after death.

How Does a Living Trust Work?

A Living Trust is a legal entity you establish to own and manage your property.  Related FAQ
What is a
A Living Trust is self-settled, which means that you transfer property that you currently own in your own name (such as a home, personal property, and investments) into the trust for your own benefit. Typically, you also make yourself the initial Trustee of a Living Trust, which means that you still maintain the legal ability to transfer property into and out of your trust.  From that point forward, the Revocable Living Trust provides continuous control over this property throughout several key phases: during your lifetime, during any time when you are incapacitated, and after you pass away. 

  1. During your lifetime: After you create your Living Trust, the main emphasis is funding your trust, which means transferring property into it.  Funding your trust often involves retitling assets (such as drafting new deeds and executing assignments of property).  Funding is possibly the most important step of establishing a Living Trust, because the trust can only control the property that it owns.  For the Revocable Living Trust to provide an effective means of avoiding probate, it needs to own and control all of the property it possibly can. Transferring property to the trust does not affect how you can use it, however, because you would still maintain legal control as the Trustee and can use it as you see fit as the only beneficiary.
  2. During your incapacity: The advantages of the Revocable Living Trust become apparent if something happens to you.  In your trust agreement, you name a successor Trustee who will take over control If you become incapacitated and can no longer manage the property yourself.  Your successor Trustee could be a trusted friend or family member, or it could be a financial institution or professional (such as an attorney or accountant).  Upon your incapcity, this successor Trustee would immediately have to ability to manage trust property according to the terms of your trust agreement. Typically, you would instruct your successor Trustee to use all trust property to support you during any period of incapacity, but your trust agreement could also provide for support of dependents, pets, or anything else that is important to you.
  3. After you pass away: In your trust agreement, you also instruct your successor Trustee about what to do after you pass away.  Your plan could be as simple as distributing that property outright to your spouse or children.  However, you could also decide to maintain this property in a continuing trust for your beneficiaries, which allows you greater control over its use.  Regardless of your choices, your successor trustee will immediately have the power to follow them. What should become apparent is that, unlike a Last Will and Testament, at no point in time does your successor Trust have to file a petition in probate court or ask a court's permission to carry out your wishes.
Revocable Living Trusts protect property for multiple generations
A Living Trust allows you to maintain control of your property throughout multiple generations without relying upon the courts.

What Doesn't a Living Trust Do?

While a Revocable Living Trust provides an excellent means of avoiding probate,  it does not accomplish every estate planning goal you may have. Before establishing a Living Trust, you should understand these limitations. 

  1. Income Tax Savings: Setting up a Revocable Living Trust is a tax neutral event, meaning that it will not increase or decrease your income taxes.  The Internal Revenue Service considers it Grantor-type trust because of the powers you maintain over it during your lifetime. Any income generated by assets in your Living Trust still gets taxed to you at your personal income tax rate.
  2. Estate Tax Savings: A Living Trust does not provide any estate tax savings over and above what we can achieve through other estate planning vehicles, such as a Last Will and Testament. However, estate taxes are not a major concern for most people due to the high exemptions currently in effect.
  3. Protection From Your Creditors: Placing your property in a Revocable Living Trust (of which you are generally both a Trustee and beneficiary) does not protect it from your creditors.  Georgia law does not generally allow you to shelter assetss from your creditors with a self-settled trust in this manner. Your creditors can still lay claim to this trust property, just as if you owned it in your own name. Although placing property into trust does not protect it from your creditors, it can ultimately protect that property from your beneficiary's creditors if you decide to maintain it in trust for them as opposed to distributing it to them outright.
  4. Medicaid Eligibility: If you are concerned that you may need Medicaid coverage for a nursing home stay, and wish to plan proactively to preserve your assets, a Revocable Living Trust will not accomplish your goal.  Property you place into a Revocable Living Trust (of which you are a beneficiary) is still considered an available asset that will prevent you from qualifying for nursing home Medicaid. In order to plan proactively for Medicaid coverage you would use a type of irrevocable trust that is often referred to as a Medicaid Asset Protection Trust
A Revocable Living Trust does not accomplish every planning goal, and you should understand these limitations. However, if you primary goal is to avoid probate, a Living Trust provides one of your best options.

Who Needs a Living Trust?

Not everyone needs to incorporate a Revocable Living Trust into their estate plan. A Living Trust is an estate planning option for those who want to avoid probate and exercise greater control over the disposition of their property. However, a Living Trust does require more work than an estate plan based upon a Last Will and Testament. Whereas you can simply draft a Will and not worry about how it gets carried out, you have to actively fund and maintain a Living Trust in order for it to fulfill its purpose. A Living Trust should only be established by those people who feel the benefits of the trust-based approach outweigh the burdens.


Although anyone could benefit by avoiding probate through the use of a Living Trust, some people should be more concerned about the probate process than others.  For example, people who own property in multiple states should strongly consider a Living Trust.   In addition, people who intend to disinherit their heirs (such as children) or to treat their heirs differently should be more inclined to avoid probate than others. As discussed in our problems with probate page these scenarios hold the risk of ancillary probate and contested probate actions, which greatly increase the time and cost involved.

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