Living Trusts Explained: How They Work and When They Make Sense
Creating a Trust in Your Will vs. Creating a Living Trust: Part 2
In Part 1, we explored how a trust created through your will—a testamentary trust—works, and why it requires your family to go through probate before the trust is even created.
In this article, we’ll walk through how a living trust works, how it changes your family’s experience, and how to decide which approach fits your goals.
As a quick refresher:
A testamentary trust is created after your death, through the probate process. That means your loved ones may wait months—or longer—before the trust is established and assets become available.
A living trust, created during your lifetime and properly funded, works very differently.
How a Living Trust Works
A living trust—also called a revocable living trust—is created while you’re alive and have full legal capacity.
You transfer ownership of your assets into the trust and typically serve as your own trustee. This means:
You retain full control
You manage your assets as you always have
Nothing about your day-to-day life changes
Within the trust, you name a successor trustee—the person who will step in if you become incapacitated or when you pass away.
You also define:
Who receives your assets
When they receive them
Under what conditions
All of the protections you might include in a testamentary trust can also be built into a living trust.
What Happens When Something Happens to You
Here’s the key difference:
A living trust already exists—and already owns your assets.
So when something happens:
There’s no need for court approval
There’s no waiting period
There’s no public process
Your successor trustee can step in immediately to:
Pay bills
Manage property
Support your family
Distribute assets according to your wishes
Everything happens privately and efficiently.
Protection During Incapacity
A living trust doesn’t just work after death—it works during your lifetime.
If you become unable to manage your affairs due to illness, injury, or cognitive decline, your successor trustee can step in without court involvement.
This helps your family avoid:
Guardianship or conservatorship proceedings
Delays in decision-making
Disruptions in financial management
Your plan continues to function exactly as intended.
The Most Important Step: Funding
A living trust only works if it is properly funded.
Funding means transferring ownership of your assets into the trust:
Retitling your home
Updating bank and investment accounts
Aligning beneficiary designations
If this step is missed, the trust cannot control those assets—and they may still go through probate.
This is one of the most common issues we see, even when people have worked with an attorney.
Creating the trust document is only the beginning. Making sure it actually works requires coordination, follow-through, and ongoing updates.
Understanding the Tradeoffs
If living trusts offer these advantages, why would someone choose a testamentary trust?
The main difference is timing of effort and cost.
A testamentary trust:
Is simpler to set up initially
Requires less upfront coordination
Defers most of the work to probate
A living trust:
Requires more upfront planning
Requires funding and organization
Avoids probate and simplifies things later
What Your Family Experiences
With a testamentary trust:
Your family navigates probate
Assets may be delayed
The process is public
Administrative tasks happen during grief
With a properly funded living trust:
Your family has immediate access to resources
The process is private
Decisions can be made without court involvement
Stress and administrative burden are reduced
Other Factors to Consider
Your decision may also depend on:
Family dynamics: Privacy can reduce potential conflict
Asset complexity: Multiple properties or businesses benefit from continuity
Location: Owning property in multiple states may require multiple probate proceedings
Your priorities: Cost, convenience, privacy, and timing all matter
There is no one-size-fits-all answer. The right approach depends on your specific situation and what matters most to you.
How We Help You Create a Plan That Actually Works
At Starsia Law, we don’t start with documents—we start with understanding.
Through our Life & Legacy Planning® process, we help you:
Understand what would actually happen in real life
Evaluate your options based on your goals
Choose the right planning approach for your family and budget
If a living trust is the right fit, we don’t stop at creating documents. We help ensure your trust is properly funded, coordinated, and kept up to date over time.
Most importantly, our team is there for your loved ones when you’re no longer able to guide them—so they’re not left navigating everything alone.
Planning isn’t just about avoiding court. It’s about making things easier for the people you love.
Schedule a complimentary 15-minute discovery call to learn how we can support you and your family.
This article is a service of Starsia Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.