A living trust is a legal document that, like a will, contains your instructions for what you want to happen to your assets when you pass away. However, unlike a will, a living trust can avoid probate at death, control all of your assets, and prevent the court from controlling your assets if you become incapacitated.
When you set up a living trust, you transfer assets from your name to the name of your trust, which you continue to control. For example, you would transfer the property from “Bob and Sue Smith, husband and wife” to “Bob and Sue Smith, trustees of the Smith Family Trust, dated (month/day/year).”
Legally you no longer own anything; everything now belongs to your trust. There is nothing for the courts to control when you pass away or become incapacitated. However, you keep full control of the assets you place in the trust. As trustee of your trust, you can do anything you could do before—buy and sell assets, change or even cancel your trust. That is why it’s called a revocable living trust. You even file the same tax returns. Nothing changes but the names on the titles.
The concept is simple, but this is what keeps you and your family out of the courts.