A revocable living trust lets you control how your assets are managed and distributed, both during your life and after death, while avoiding probate for anything properly placed in it. Setting one up correctly involves two distinct steps that are easy to get only halfway through.
Step one: drafting the trust document
The trust document names the trustee (often yourself, while you're alive and able), a successor trustee, and the beneficiaries, and spells out how assets should be managed and distributed. It needs to be specific enough to avoid ambiguity but flexible enough to handle circumstances that change over the years.
Step two: funding the trust
A trust only controls assets that are actually retitled into its name — real estate, bank accounts, investment accounts. This step is where most DIY trusts fail: people sign the document and stop there, leaving assets in their own name where they still have to go through probate.
What stays out of the trust
Retirement accounts and life insurance generally pass through beneficiary designations rather than the trust itself, and typically shouldn't be retitled into it. A trust should be coordinated with these designations, not treated as a replacement for them.
Revocable means exactly that
You can amend or revoke the trust at any time while competent, which is what makes it different from an irrevocable trust — but that flexibility also means it offers no asset protection or estate tax benefits the way an irrevocable trust can.