Living Trust FAQ: Probate, Costs, Taxes & Privacy

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What exactly is a living trust?

A trust is a legal setup where one person, the trustee, holds legal ownership of property for someone else's benefit — the beneficiary. When you set up your own trust, you can name yourself as trustee, which means you keep full control over everything inside it.

People sometimes call this an "inter vivos" trust, which just means you create it while you're still alive, rather than having it spring into existence after you die. Depending on how you structure it, a living trust can help your estate skip probate, ease the tax burden, or set up ongoing management of your property. If you want the mechanics of setting one up, see Making a Living Trust: Can You Do It Yourself?

Why bother with a living trust at all?

The main draw is that anything left through the trust skips probate court entirely. Probate, in short, is the court process that handles paying off a deceased person's debts and passing along whatever's left to the rightful heirs.

If you want your house to pass through the trust, you'll need to sign a new deed showing that you now hold the property as trustee of your living trust.

Probate typically stretches on for months before heirs see a dime, and by the time it wraps up, there's often less to inherit — legal and court costs can eat up roughly 5% of the estate in many cases.

Beyond dodging probate, a living trust offers a handful of other perks.

That said, not everyone needs to worry about probate, and a living trust isn't automatically the right move for every situation. Whether it makes sense for you depends on your assets, your state's laws, and your goals — it's worth weighing carefully or checking with someone familiar with your circumstances.

How does putting property in a trust sidestep probate?

Anything you've moved into your living trust before death never enters probate. Instead, your successor trustee — the person you've designated to step in once you're gone — simply hands ownership over to the beneficiaries named in the trust paperwork. This usually wraps up in a matter of weeks, without lawyer fees or court costs. Once every asset has been distributed, the trust itself stops existing.

Does setting one up cost a lot?

A straightforward living trust isn't much harder to put together than a will, and most people can skip hiring an attorney altogether. A solid self-help guide or software tool can walk you through drafting a valid Declaration of Trust — the document that actually forms the trust. If a question comes up that your resource doesn't cover, you may need a quick consult with a lawyer, but rarely will you need to hand the whole project to a high-priced expert.

Getting real benefit from your trust does mean handling some paperwork carefully. For instance, transferring your house into the trust means signing a fresh deed that shows you now own it as trustee. It can feel like a hassle, but it's gotten easier over the years simply because living trusts are so widely used now.

Does a living trust ever become public record, the way a will does?

No. Once a will heads to probate court, it becomes public — along with everything else tied to the process, like inventories of what the deceased owned and owed. A living trust's terms, by contrast, stay private.

Will a living trust shield assets from creditors?

No. If a creditor wins a judgment against you, they can pursue trust property just as easily as if it were still titled in your own name.

After death, everything you owned — including whatever sits in a living trust — remains fair game for legitimate debts. Say your house passes to your kids through the trust; a creditor can still demand payment from them, capped at the home's value. Because real estate ownership is always public record, creditors can track down who inherited a house. Other assets are harder to trace, since a trust document — unlike a will — isn't filed publicly, so creditors might never dig deep enough to find them.

Interestingly, probate actually offers its own kind of creditor protection. During probate, known creditors get formal notice and a window to file claims. Miss that deadline, and they lose their chance for good.

If I've got a living trust, do I still need a will?

Yes — and here's the reasoning.

A will acts as a safety net for anything you never got around to transferring into the trust's name. Say you buy something valuable shortly before you die — you might not think to retitle it into the trust, which means it falls outside the trust's terms. A will can include a catch-all clause naming someone to inherit whatever wasn't specifically assigned elsewhere.

Without a will, any property that escapes your trust or other probate-avoidance tools (like joint tenancy) gets divided among your closest relatives according to your state's default inheritance rules — rules that might not match what you'd actually have wanted.

Can a living trust lower estate taxes?

A basic probate-avoidance trust has no effect on state or federal estate tax bills.

Worth noting: for deaths occurring in 2026, only estates exceeding $15 million owe federal estate tax — a threshold that keeps almost everyone off the hook. This exemption amount is set to rise with inflation over time.

AB trusts used to be a common tool for married couples trying to reduce estate tax exposure. But with today's generous exemption and spousal "portability" rules, AB trusts have mostly fallen out of necessity.

Does my trust need its own EIN?

Generally, no — a revocable living trust doesn't need its own taxpayer identification number while the person who created it is still living.

While the grantor is alive, the trust stays revocable, and taxes are filed under the grantor's own Social Security number — no separate EIN required. Once the grantor dies, though, the trust becomes irrevocable, and the successor trustee must apply to the IRS for an EIN to handle the trust's tax filings going forward.

For jointly held trusts, either spouse's Social Security number can be used for shared property. Keep in mind that whichever number you pick is the one income gets reported under — irrelevant for couples filing jointly, but potentially significant for those filing separately. Property owned individually within a shared trust should use that individual's Social Security number.

For more on what comes next, see The Trustee's Job.