A complete guide to establishing and funding a revocable living trust, including trustee selection, asset transfer, and ongoing administration to avoid probate.
Evaluate whether your estate would benefit from probate avoidance
Probate costs typically run 3-7% of the estate value. For an estate worth $500,000, that's $15,000-$35,000 in court fees and attorney costs. States like California and Florida have especially expensive probate processes.
Determine if you own real property in multiple states
Without a trust, your heirs must open a separate probate case (called ancillary probate) in each state where you own real estate. Each ancillary probate costs $2,000-$10,000. A trust avoids all of them.
Understand the difference between revocable and irrevocable trusts
A revocable trust offers no asset protection or tax benefits during your lifetime — you can change or dissolve it anytime. An irrevocable trust removes assets from your taxable estate but you give up control permanently.
Get cost estimates from 2-3 estate planning attorneys
A basic revocable living trust costs $1,500-$3,000 through an attorney. Complex trusts with tax planning provisions run $3,000-$7,000. Online services charge $200-$600 but don't handle funding or state-specific issues.
Select Trustees and Beneficiaries
Name yourself as the initial trustee (standard for revocable trusts)
As trustee of your own revocable trust, you maintain full control over all assets. Your Social Security number serves as the trust's tax ID — no separate tax return is required during your lifetime.
Choose a successor trustee who will manage the trust after your death or incapacity
A corporate trustee (bank or trust company) charges 0.5-1.5% of assets annually but provides professional management. An individual trustee is free but may lack financial experience. Name at least 2 alternates.
Identify all beneficiaries with full legal names, dates of birth, and distribution terms
You can set conditions on distributions — for example, releasing funds at ages 25, 30, and 35 in thirds. Staggered distributions protect young beneficiaries from spending a large inheritance too quickly.
Include provisions for beneficiaries with special needs if applicable
A direct inheritance can disqualify a disabled beneficiary from Medicaid and SSI benefits. A special needs sub-trust preserves eligibility. The 2024 Medicaid asset limit for individuals is $2,000 in most states.
Draft the Trust Document
Include the trust name, date of creation, and names of all parties
The standard naming convention is 'The [Your Name] Revocable Living Trust dated [Month Day, Year].' Use this exact name consistently on all asset transfers — even small variations can cause title issues.
Define the trustee's powers including buying, selling, investing, and distributing assets
Most states have a default Uniform Trust Code but explicit powers are stronger. Include the power to deal with real estate, manage business interests, and make tax elections. Broader powers mean fewer court petitions.
Specify distribution instructions — outright, staggered, or conditional
An outright distribution is simplest but offers no creditor protection for heirs. A lifetime trust for each beneficiary costs more to draft ($500-$1,000 extra per beneficiary) but protects inherited assets from divorce and lawsuits.
Include an incapacity clause allowing the successor trustee to step in without court intervention
Without this clause, your family must petition for a conservatorship if you become incapacitated — a process taking 2-4 months and costing $5,000-$15,000. The incapacity clause avoids this entirely.
Sign the trust document before a notary public
Unlike wills, trusts in most states do not require witnesses — only notarization. However, some states (like Florida) require both. Notarization costs $5-$15 per signature. Keep the original in a fireproof location.
Fund the Trust — Transfer Assets
Transfer real estate by recording a new deed naming the trust as owner
You need a quitclaim or grant deed transferring from your name to the trust's name. Recording fees are $15-$100 per document. This does NOT trigger a due-on-sale clause under the Garn-St. Germain Act for residential property.
Prepare and record a new deed for each property
Notify your mortgage company of the transfer
Update homeowner's insurance to reflect trust ownership
Retitle bank accounts and brokerage accounts in the trust's name
Most banks require a certificate of trust (a summary of key trust terms) rather than the full document. Bring the certificate, a photo ID, and the trust's first page. Allow 1-2 weeks per institution for processing.
Assign ownership of vehicles, boats, or other titled property to the trust
Vehicle title transfer fees vary by state — typically $15-$75. Some states charge sales tax on trust transfers (though most exempt them). Check with your state DMV before transferring to avoid unexpected fees.
Do NOT transfer retirement accounts (IRAs, 401(k)s) into the trust — name the trust as beneficiary instead
Transferring a retirement account into a trust triggers immediate taxation on the entire balance. Instead, name the trust as contingent beneficiary. Name your spouse as primary beneficiary for the spousal rollover advantage.
Update life insurance beneficiary designations if the trust should receive proceeds
Life insurance proceeds paid to a revocable trust are included in your taxable estate. For estates over the federal exemption ($13.61 million in 2024), an irrevocable life insurance trust (ILIT) keeps proceeds out of the estate.
Create Supporting Documents
Draft a pour-over will to catch any assets not transferred to the trust before death
A pour-over will directs all remaining assets into the trust at death. These assets still go through probate, but they end up in the trust for distribution. Attorney cost for a pour-over will is typically $300-$500.
Prepare a certificate of trust (abstract of trust) for financial institutions
The certificate includes the trust name, date, trustee names, trustee powers, and tax ID — but not the distribution terms. This protects your privacy while giving banks what they need. Most attorneys include this at no extra charge.
Create a schedule of assets listing everything transferred into the trust
Update this schedule whenever you buy or sell property, open new accounts, or make significant purchases. An outdated schedule is the number one reason trust administration becomes complicated after death.
Store all documents together and inform your successor trustee of their location
Give your successor trustee a copy of the certificate of trust and the asset schedule now. They don't need to see the full trust document until needed. Keep originals in a fireproof safe — not a bank safe deposit box.
Frequently Asked Questions
How much does it cost to set up a living trust?
An attorney-drafted revocable living trust typically costs between $1,500 and $3,000 for an individual, and $2,000 to $5,000 for a married couple with an A-B trust structure. Online services like Nolo or Trust & Will offer trust packages for $200 to $600, though these may not handle complex multi-state property or blended family provisions well. The trust document itself is only part of the cost -- funding the trust (retitling deeds, updating account beneficiaries) adds $500 to $1,500 in recording fees, title work, and financial institution paperwork. This is not legal advice -- consult an attorney for your specific situation.
What is the difference between a living trust and a will?
A will takes effect only after death and must pass through probate court, which is a public process lasting 6-18 months in most states. A revocable living trust takes effect immediately upon creation, holds assets during your lifetime, and transfers them to beneficiaries upon death without probate -- keeping the details private and typically settling within weeks. A trust also provides continuity if you become incapacitated, since your successor trustee can step in without court involvement, while a will offers no protection during your lifetime. Most estate planners recommend pairing a trust with a pour-over will that catches any assets not transferred into the trust before death.
Do I need a living trust if I already have a will?
Whether a trust adds value depends on your state's probate process and the size of your estate. In states with expensive or slow probate (California, Florida, New York), a trust can save beneficiaries 3-5% of the estate value in fees and 6-18 months of waiting. If you own real estate in more than one state, a trust avoids ancillary probate proceedings in each state, which alone can justify the cost. For smaller estates under $100,000 in states with simplified probate procedures, a well-drafted will may be sufficient. This is not legal advice -- consult an attorney for your specific situation.
Does a living trust protect assets from creditors or lawsuits?
A standard revocable living trust provides zero creditor protection during your lifetime because you retain full control over the assets and can revoke the trust at any time. Creditors and lawsuit judgments can reach revocable trust assets just as easily as assets held in your personal name. Irrevocable trusts, where you permanently give up control, can shield assets from creditors after a lookback period (typically 2-5 years depending on the state). Domestic asset protection trusts are available in about 20 states and offer creditor shielding while allowing some retained interest, though their protection varies significantly by jurisdiction. This is not legal advice -- consult an attorney for your specific situation.
How long does it take to set up and fund a living trust?
Drafting the trust document with an attorney takes 1-3 weeks, including an initial meeting, document preparation, and a signing appointment. The more time-consuming part is funding the trust -- transferring real estate requires recording new deeds (1-4 weeks per property depending on the county), retitling bank and brokerage accounts takes 1-2 weeks each, and some institutions require their own internal transfer forms. A fully funded trust with 2-3 properties and multiple financial accounts typically takes 6-10 weeks from start to finish. Leaving assets outside the trust defeats its primary purpose, so completing the funding step is critical.