Lawyer working on a living trust

How to Set Up a Living Trust: Benefits and Considerations

Eldwell logo

A living trust is a powerful legal document that allows you to transfer assets to your beneficiaries while avoiding the often lengthy and expensive probate process. It also offers a wide range of other benefits, including privacy and flexibility in managing your assets. If you're considering setting up a living trust, it's essential to understand its benefits, the considerations involved, and the steps required to establish one. In this blog post, we'll delve into these aspects to help you make an informed decision.

The Benefits of a Living Trust

The primary advantage of a living trust is that it allows your beneficiaries to bypass the probate process. Probate is the legal process by which a deceased person's assets are distributed to their heirs or beneficiaries. This process can be time-consuming, expensive, and stressful for your loved ones. By transferring your assets into a living trust, you can ensure a smoother transition of property and assets without the need for court intervention.

Unlike a will, which becomes a matter of public record once it's submitted to probate, a living trust remains private. This means that the details of your assets, as well as your beneficiaries, are kept confidential. This privacy can be especially valuable if you have a high net worth or wish to keep your financial affairs out of the public eye.

A living trust offers a significant degree of control and flexibility in managing your assets. As the grantor (the person who creates the trust), you can serve as the initial trustee, which allows you to maintain control over your assets during your lifetime. You can also make changes to the trust, such as adding or removing assets, changing beneficiaries, or even revoking the trust entirely if your circumstances change.

A living trust can provide more robust protection against legal challenges than a will. Since the assets in a living trust are not subject to probate, it's more difficult for disgruntled family members or creditors to contest the distribution of assets. Additionally, a trust is a more complex legal document than a will, making it more challenging to challenge on the grounds of capacity or undue influence.

A living trust allows you to plan for the possibility of incapacity. By naming a successor trustee, you can ensure that someone you trust will manage your assets if you become mentally or physically incapacitated. This can provide peace of mind for both you and your loved ones, knowing that your affairs will be taken care of in the event of an unexpected health crisis.

Considerations Before Setting Up a Living Trust

Setting up a living trust can be more expensive upfront than creating a simple will. This is because establishing a trust involves more complex legal work and may require the assistance of an attorney with specialized expertise in trust and estate law. However, the costs of setting up a trust can be offset by the potential savings in probate fees and the reduced likelihood of legal challenges.

A living trust requires ongoing maintenance to remain effective. This includes transferring assets into the trust, managing the trust's assets, and filing annual tax returns. While serving as your own trustee can save on trustee fees, it's essential to be prepared for the time and effort required to manage your trust effectively.

A living trust does not automatically provide for the guardianship of minor children. If you have minor children and wish to name a guardian for them, you will still need a will or a separate legal document that addresses this issue.

While a living trust can make it more difficult for creditors to access your assets after your death, it does not provide immediate protection from creditors during your lifetime. Assets held in a revocable living trust are still considered part of your personal estate and can be subject to creditor claims. However, certain types of irrevocable trusts can offer more robust protection from creditors.

How to Set Up a Living Trust

Before setting up a living trust, it's essential to assess your needs and goals. Consider the size and complexity of your estate, your desire for privacy, and your concerns about potential incapacity. Reflect on whether the benefits of a living trust align with your objectives and whether you're prepared for the ongoing responsibilities associated with managing a trust.

Although it's possible to create a living trust on your own using online resources or do-it-yourself legal software, it's generally advisable to consult an attorney experienced in trust and estate law. An attorney can help you navigate the complex legal requirements and ensure that your trust is properly set up to achieve your goals.

The trust agreement is the legal document that establishes the living trust. It outlines the terms of the trust, names the grantor, trustee, and beneficiaries, and details how the trust's assets will be managed and distributed. An attorney can help you draft a trust agreement that complies with your state's laws and reflects your intentions.

Once your trust agreement is complete, you'll need to transfer your assets into the trust. This may involve changing the title of real estate, transferring bank and investment accounts, and updating beneficiary designations on life insurance policies and retirement accounts. Remember that only assets held in the trust will be subject to its provisions, so it's crucial to ensure that all relevant assets are transferred.

After setting up your living trust, it's essential to maintain it properly to ensure its effectiveness. This includes managing the trust's assets according to the terms of the trust agreement, filing any required tax returns, and updating the trust as needed to reflect changes in your circumstances or wishes.


A living trust can be a powerful estate planning tool that offers numerous benefits, including avoiding probate, maintaining privacy, and providing flexibility and control over your assets. However, it's essential to weigh the costs and ongoing responsibilities associated with a living trust before deciding if it's the right choice for you. By understanding the benefits, considerations, and steps involved in setting up a living trust, you can make a more informed decision about whether this estate planning strategy aligns with your needs and goals.

Ready to Build Your Digital Estate Plan?

Discover Eldwell Guardian, the trusted platform to securely store, manage, and share your vital personal information. Start building your digital estate plan today!

Learn More