In many circumstances, living trusts can help to avoid costly probate and reduce or eliminate the impact of federal estate taxes on your assets. A living trust can also replace the expensive, time consuming and restrictive process of appointing a conservator to handle your financial affairs if you become incapacitated.
Despite these benefits, living trusts are not necessary or helpful in every type of estate plan. In general, as the value of your assets increases, so do the benefits of obtaining a living trust.
A living trust can partially or completely replace a will, making them a vital part of your comprehensive estate plan. Real estate, bank accounts, stocks and other assets can be put into the trust to be managed for your benefit during your lifetime and more easily transferred to your beneficiaries when you die. Most living trusts are revocable, which means they can be amended or cancelled at any point while you are still alive and competent.
As the trustor or grantor, you can appoint a trustee who will control and manage the trust during your lifetime, and distribute assets to your intended beneficiaries when you die. It is also possible to name yourself as the trustee, and appoint a successor trustee to take over control of the trust in the event of your death or incapacitation.
Trusts are not for everyone, however, as they can be more costly to set up than a will and can create additional complexities during the trust administration process. Consult with an experienced estate planning attorney to see if a living trust is beneficial to your unique situation and goals.
Source: The State Bar of California, Do I Need a Living Trust, last accessed May 15, 2015