What Is a Trust, and Why Do I Need One?

The principal function of a revocable living trust is to avoid having to probate the assets that are titled in the trust at the time of your death, thereby saving your estate and heirs the considerable costs and delays of probating those assets. Your trust is not designed to avoid any estate, inheritance, income or other tax on those assets and the earnings thereon, which will remain the same as they would be if you owned those assets outright at the time of your death. Another function of your revocable living trusts is to conduct the probate of those assets that are left in your estate at the time of death, which are not disposed of by a separate list. This is accomplished by having your Will pay your taxes due upon your death along with your funeral/last illness expenses (using funding from your revocable living trust and/or other trusts where required to be made available for this purpose by the language of the instruments creating those trusts, along with the balance of your property (except for those listed items), which would pour over into your revocable living trust for further disposition. 

The trustee(s) of your revocable living trust will also serve as the personal representative(s) of your estate to cut down on the costs and time of your estate administration. Of course, certain assets, such as IRA’s, retirement plan death benefits, life insurance policy proceeds and property held with rights of survivorship pass independently outside of probate and may only benefit from assignment to your revocable living trust by virtue of the administration and distribution scheme operating under your revocable living trust.