What a Living Trust Does and Does Not Do

A living trust is one that takes effect during your lifetime. This makes it different from a testamentary trust that only goes into effect when you die. A living trust is a useful estate planning tool, but some people do not understand how it works. It should be considered a will supplement instead of a substitute. The following are issues that arise when someone passes on and what a living trust does or does not do in each situation.


Many people create a living trust to avoid the often long and costly process of probate, which involves proving the validity of the will and then inventorying and distributing the property according to its terms. The rules that govern the disposition of property held in trust are different from probate laws, which do not apply to a trust. Therefore, any property included in the trust does not need to go through probate, but any remaining property does.

Estate Taxes

Some people create a living trust so that their loved ones will not have to pay estate taxes on the property they inherit. However, this only works under certain circumstances. The laws of your state may make a difference, as does the type of trust you create. A revocable living trust, i.e., one that you can make changes to as long as you are still alive, usually does not provide any tax advantages to either you or your loved ones. For tax purposes, the property held in trust is still considered part of your estate.

However, if you create an irrevocable living trust, you are no longer the owner of the property for tax purposes even if you still have control over it. Therefore, your heirs may avoid estate taxes with an irrevocable living trust. However, it may be that there are other estate planning products available that would provide better protection from estate taxes if that is your objective.


Regardless of how comprehensive your trust may be, for some matters you simply need a will. Trusts deal with property, not people. Therefore, if you have minor children and need to appoint a guardian for them in the event of your death, you need to have a will. However, you can also have a trust in which the children may be beneficiaries.

For all the value that living trusts offer, they do have their limitations. Before creating one, it is important to make sure that it will accomplish what you want it to do for you. A living trust lawyer in Sacramento, CA can discuss estate planning options with you. Arrange a consultation by contacting a law office.


Thanks to Yee Law Group for their insight into estate planning and what a living trust does and doesn’t do.