Definition
A revocable trust you create during your lifetime to hold your assets, with yourself as trustee and a successor trustee named to take over if you become incapacitated or die. Because the trust, not you, technically owns the assets, they pass to your beneficiaries under its terms without going through probate. You can change or cancel it at any time, which is also why it provides no tax savings and no creditor protection.
Why it matters
Probate can take months to more than a year and cost thousands in court and attorney fees, all in public records; a funded living trust skips it and handles incapacity without a court-appointed conservator. The common failure is never retitling assets into the trust, which leaves them in probate anyway.
Example
A couple retitles their $500,000 home and $200,000 brokerage account into a living trust and names their daughter as successor trustee. When the second spouse dies, the daughter distributes the $700,000 to herself and her brother within weeks, avoiding a probate process that in their state would have taken about a year. A $40,000 car they never retitled still has to go through the simplified small-estate process.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.