Creating a living trust (revocable)

A revocable living trust is a legal entity you create during your lifetime to hold and manage your assets. You transfer ownership of property —- home, bank accounts, investments —- into the trust's name while retaining full control as the initial trustee.

15 steps across 3 sections

1. Draft the Trust Agreement

  • The grantor (you, the creator)
  • The initial trustee (you, while alive and competent)
  • Successor trustee(s) for incapacity and death
  • Beneficiaries and distribution instructions
  • Trust terms (conditions, ages for distribution, etc.)
  • Powers of the trustee (investment, sale, distribution authority)

2. Initial Trustee

  • Typically you (the grantor). You manage all trust assets exactly as before
  • Married couples often serve as co-trustees
  • You retain full control: buy, sell, transfer, invest trust assets freely
  • File taxes on your personal return (revocable trust is a "grantor trust" —- same tax ID as you)

3. Successor Trustee

  • Takes over when you die or become incapacitated
  • Should be someone trustworthy, organized, and financially capable
  • Can be a family member, friend, or professional fiduciary/corporate trustee
  • Name at least one backup successor trustee
  • Corporate trustees (bank trust departments) charge 0.5—1.5% of trust assets annually but provide professional management and continuity

Common Mistakes

  • Not funding the trust
  • Forgetting new acquisitions
  • Not having a pour-over will
  • Thinking a trust replaces all other documents
  • Not updating after life changes

Pro Tips

  • Create a "trust funding checklist"
  • Keep a "schedule of assets"
  • Put sticky notes on your trust binder
  • Inform your successor trustee
  • Consider a trust protector provision

Sources

Related Checklists