You can put nearly any asset you own—homes, cars, bank and investment accounts, business interests, even artwork and valuables—into a revocable living trust. A revocable trust (often called a living trust) lets you remain in control while you’re alive and specify exactly who inherits those assets. According to a 2023 estate planning survey, about 73% of Americans have no documented plan for their assets, often exposing their families to lengthy, expensive probate.
- 🏠 Real estate & property: Learn how to transfer homes, land, and vacation properties into a trust so they avoid probate.
- 💰 Financial accounts: We cover bank, brokerage, retirement, and other accounts – what to include in your trust and what to leave out.
- 🚗 Unique assets: Discover whether cars, collectibles, digital assets or even pets (and pet trusts) can belong in your trust.
- ⚠️ Common pitfalls: Avoid mistakes like failing to retitle assets or misusing joint accounts that can derail your estate plan.
- ⚖️ Trust vs. alternatives: Compare revocable trusts with wills and other strategies, including key federal rules and state law differences, so you see exactly when a trust makes sense.
Which Assets Belong in Your Revocable Trust
Nearly everything you own can be placed into a revocable trust. This includes real property (your house, vacation home, condo, or land) and personal property (furniture, art, jewelry, collectibles). You can also move financial assets like bank accounts, brokerage and investment accounts, CDs, and even cryptocurrency or domain names into the trust. Business interests—such as shares in an LLC or corporation—can be assigned to the trust too (you may need to follow corporate rules when retitling those assets).
By law, most property you already own can be transferred to your trust. For example, you would change the deed on your home to the name of your trust. You can retitle car titles into the trust (though some states may tax this, as noted below), and you can name the trust as beneficiary of life insurance or retirement plans if desired. Even intangible rights—like patents or royalties—can be held by the trust. Essentially, any asset you hold in your name can generally be moved into the trust, turning it into the legal owner of that asset (with you controlling it as trustee).
Under U.S. federal law, a revocable trust is tax-transparent: it’s treated as a “grantor trust” for income taxes, so all income and gains remain taxable to you personally. You don’t file a separate IRS return for a living trust while you’re alive, and on death the assets get the normal step-up in basis for your heirs. State law sets the rules for creating and revoking trusts. Most states have adopted the Uniform Trust Code, which by default treats trusts as revocable unless stated otherwise. However, state-specific quirks matter. For example, some states allow married couples to hold a home as tenants by the entirety (passing it automatically to the surviving spouse) so they may delay using a trust. In Connecticut and a few states, transferring a car into a trust can trigger sales tax, so people often keep vehicle titles in joint names or list a payable-on-death beneficiary instead.
Avoid These Common Pitfalls (What Not to Do)
When funding your trust, don’t forget anything important. A trust only covers assets formally put into it, so if you neglect something, that asset will still face probate. For example, if you buy a new property but never re-title it in the trust, it remains outside the trust. Always retitle deeds, accounts, and titles in the trust’s name. A common mistake is moving everything except one checking account and then forgetting to write checks or auto-pay bills from a trust account. It’s often easier to keep one bank or payment account outside so everyday transactions go smoothly, but any extra cash or investments should still go into the trust or have the trust named as beneficiary.
Retirement accounts (IRAs, 401(k)s) should not be transferred into the trust. Those stay in your personal name and use beneficiary designations (you can name the trust as a beneficiary if needed). Putting IRAs into the trust could trigger immediate taxation. Similarly, life insurance policies usually stay outside; instead you either name your trust as beneficiary or use an irrevocable insurance trust (an ILIT) if estate tax is a concern. Do not assume that moving everything will save tax – a revocable trust won’t reduce estate or income taxes because you still own the assets.
Another pitfall: incorrect joint ownership. If you hold assets jointly with your spouse, simply creating a trust may not include those. For example, funds in a joint account or property held as tenants in common won’t be in the trust unless retitled. In some states, tenancy by entirety can avoid probate on a home without a trust. If your plan is to use the trust, consider severing joint titles and retitling each spouse’s share into their individual trust (or update beneficiary designations).
Finally, plan for the unexpected. If you become incapacitated, ensure your successor trustee is named. Unlike a will, a trust can manage your assets if you’re unable to, but only if it’s funded and the trustee is prepared. Don’t wait too long to fund the trust. The best time to transfer assets into it is now – otherwise your heirs might have to drag those assets through probate after you die, which is exactly what a trust is meant to avoid.
Illustrative Scenarios: How Trusts Are Used
Scenario 1: Married with Children – Assets: Married parents (Alice & Bob) own a home, two cars, joint bank accounts, investment accounts, and each has retirement plans. Goal: Smoothly transfer assets to their two kids, avoid probate, and plan for incapacity.
| Asset Type | Trust Handling |
|---|---|
| Home | Title changed to trust; avoids probate and simplifies inheritance. |
| Joint savings/checking | Title one joint account to trust; keep one checking account outside for paying bills. |
| Investment accounts | Move brokerage accounts into trust or name trust as pay-on-death beneficiary. |
| Retirement (401k/IRA) | Not moved into trust; keep them in your name with the trust as designated beneficiary. |
| Cars | Keep titles jointly (or retitle to trust, depending on state); list kids as secondary insured. |
Alice and Bob fund the trust by changing the home deed and retitling most accounts. They leave one checking account in their names (for ease) and each spouse keeps their individual IRAs separate with the trust listed as beneficiary. This way, when the second spouse dies, their estate avoids probate and the kids receive assets directly per the trust instructions, not by a court order.
Scenario 2: Small Business Owner – Assets: Carol owns 60% of an LLC and a vacation rental property, plus her house and brokerage account. Goal: Ensure business continuity and protect privacy, while avoiding probate.
| Asset Type | Trust Handling |
|---|---|
| LLC Ownership | Assign LLC membership interest to trust; allows designated trustee to manage business. |
| Primary residence | Deed placed into trust; simplifies passing house to heirs or spouse. |
| Vacation rental | Title changed to trust (helps avoid probates in two states if rental is out-of-state). |
| Brokerage account | Retitled to trust or pay-on-death to trust; trust income goes back to Carol until death. |
| Equipment/Inventory | Business equipment stays owned by LLC, not trust; the trust just owns Carol’s company shares. |
Carol’s trust now owns her personal stake in the business and her properties. If she becomes incapacitated, her chosen trustee can operate the LLC on her behalf and manage the rental. When she dies, the transition to her heirs or designated successor is seamless and private, without a court process.
Scenario 3: Multi-State Property Owner – Assets: Dan (single, widowed) owns a house in Texas, a condo in Florida, various bank accounts, and a life insurance policy. Goal: Avoid separate probates in two states and manage assets if he becomes disabled.
| Asset Type | Trust Handling |
|---|---|
| Texas house | Deeded to trust; home goes to trust beneficiaries without Texas probate. |
| Florida condo | Deeded to trust; avoids Florida probate and double court costs. |
| Bank accounts | Joint accounts retitled into trust; an individual bank account has trust as POD beneficiary. |
| Life insurance policy | Trust named as policy beneficiary; proceeds pass through trust terms (still taxable in estate). |
| Digital assets | Instructions stored in trust document; e.g. trustee given access to online accounts. |
Dan funds his trust with both properties, so upon death the trust controls them directly. This avoids two separate probate cases. His bank accounts and insurance are arranged so the trust or its beneficiaries will receive the funds. If Dan becomes incapacitated, his successor trustee immediately has full authority over all trust assets in both states, without any court intervention.
Why a Revocable Trust Matters (Benefits & Evidence)
Using a revocable trust offers real, practical benefits. The big advantage is probate avoidance. When assets are in the trust, they pass to heirs by the trust’s terms, not by court order. This usually means faster inheritance, no executor fees, and lower costs. For example, probate in some states can consume 4–7% (or more) of an estate’s value in fees and take many months. A fully funded trust typically settles in a matter of weeks without those public court proceedings.
Trusts also maintain privacy: the trust agreement is not filed in court. Unlike a will (which becomes public record), your trust terms and the list of assets remain private. Many families value this confidentiality, especially if they have unique assets or wish to keep disbursements discreet.
Another major benefit is incapacity planning. If you become unable to manage your affairs (due to illness or injury), your successor trustee can take over seamlessly. No court guardianship is needed – the trust document specifies who steps in. This peace of mind is a key reason professionals recommend trusts.
Multi-state holdings highlight another advantage. As seen in the scenarios, if you own property in more than one state, a trust avoids having to go through probate in each state (called ancillary probate). Each avoided estate administration can save thousands in fees.
On the flip side, revocable trusts have no downside on taxes: your estate is still subject to any estate taxes you might owe, and all income from trust assets is taxed normally to you. You keep full control, so the trust itself offers no asset protection from creditors or tax reduction. (That’s the domain of irrevocable trusts and other strategies.) In short, the evidence is clear: a living trust won’t save you money on taxes, but it saves your beneficiaries time and hassle – which for many people is worth the setup.
| Pros | Cons |
|---|---|
| Avoids probate (assets pass privately, quickly to beneficiaries) | No creditor protection: You still own the assets, so creditors can reach them. |
| Keeps estate matters private (no public court records) | No tax break: Assets still count toward estate tax; no income tax benefits. |
| Provides for disability (successor trustee steps in on incapacity) | Requires time and effort to fund the trust (retitling, updating deeds). |
| Gives flexibility (can change or revoke at any time) | Cost: Legal fees to set up; must update beneficiary titles as needed. |
| Allows precise control of distributions (e.g., to children, charities as directed) | If overlooked, any unfunded assets may accidentally go through probate. |
Revocable Trust vs. Other Estate Tools
A revocable living trust is often compared to a will. The biggest difference: a fully funded trust bypasses probate completely, whereas assets under a will must go through court. Trust distributions happen without waiting for court approval or paying probate attorneys. Unlike a will, a trust can also handle assets right away if you die or become incapacitated.
Compared to an irrevocable trust, a revocable trust offers more flexibility but fewer protections. You remain in charge of a revocable trust and can change it, so it doesn’t shelter assets from estate tax or creditors. An irrevocable trust (like a Medicaid trust or certain tax-shield trusts) can protect against nursing home costs or estate tax, but you lose control. Most people start with a revocable trust and consider irrevocable tools only if asset-protection or tax issues arise.
You may also hear about beneficiary designations (TOD/POD) on accounts. These are like mini trusts for specific accounts: you name who gets that account at death. They avoid probate but only cover that one account. A living trust is more comprehensive. It can include everything, and it can distribute assets at specific times (e.g. when children reach an age) instead of giving it all at once as beneficiary designations usually do.
Joint ownership (like joint bank accounts or joint property) is another alternative to avoid probate. But joint ownership can have pitfalls (creditor exposure, tax issues, or estate tax traps if both owners die close together). A trust avoids those complications by treating each asset according to its own terms and timelines.
Key Terms & Entities
- Grantor (or Settlor): The person who creates and funds the trust. In a revocable trust, this is usually also the initial trustee (person who controls the trust).
- Trustee: The individual or institution that holds legal title to the trust assets and manages them according to the trust’s instructions. You can be your own trustee while alive, and you name successor trustees to act if you are incapacitated or after you pass.
- Beneficiary: A person or entity designated to receive assets or income from the trust. For a revocable trust, you are typically the primary beneficiary while alive, and your heirs become beneficiaries after death.
- Trust Corpus/Principal: The collection of assets placed in the trust (the “body” of the trust). These are the items held by the trustee for the beneficiaries.
- Pour-Over Will: A will designed to work with a living trust. Any assets not titled in the trust at death are “poured over” into the trust by the will. It acts as a safety net but still requires probate for those assets.
- Uniform Trust Code (UTC): A model law that most states have adopted (with variations) which lays out the basic rules for trusts, including how they can be funded, amended, or revoked. It’s why trusts have similar rules in many states.
- Probate: The legal process of administering a deceased person’s will (or estate) through the courts. A key benefit of a trust is avoiding probate, which saves time, expense, and public disclosure of your estate.
- Grantor Trust: A tax term. A revocable living trust is usually a grantor trust, meaning for income tax purposes the trust is ignored and all income is taxed to the grantor as if the trust didn’t exist.
- IRS and Trusts: For federal tax purposes, there is no separate tax ID needed for a fully revocable trust. Upon death, if the trust becomes irrevocable, the estate may need its own tax ID and return, but during life no separate filings are required.
FAQs
Q: Can I put my house in a revocable trust?
A: Yes. You can transfer real estate (house, land, etc.) into your trust by changing the deed. This typically avoids probate and lets you live there as trustee until you pass away.
Q: Can I put my car in a revocable trust?
A: Yes. In most states, you can retitle a vehicle in your trust’s name. Some states have transfer taxes, so some people use joint ownership or POD beneficiaries instead. Otherwise, cars can be included in a trust.
Q: Can I put my IRA or 401(k) in a revocable trust?
A: No. Retirement plans should not be funded into the trust directly. Keep them in your name and use beneficiary designations (you can name the trust as beneficiary, but the account itself stays outside). Transferring them could trigger taxes.
Q: Will a revocable trust save me estate taxes?
A: No. A revocable trust does not reduce estate or gift taxes. Because you retain control, the trust assets are still counted in your estate at death. It’s for control and probate avoidance, not tax reduction.
Q: Does a revocable trust protect assets from creditors?
A: No. Since you can revoke the trust, creditors can still reach the assets in it. Revocable trusts are not asset-protection tools. To shield assets from creditors you would need an irrevocable trust or other strategies.
Q: Do I need a lawyer to put assets in my trust?
A: No. Technically, you can fill out and sign the documents yourself. However, mistakes in funding or drafting can be costly. It’s usually wise to consult an estate attorney or planner to ensure everything is titled correctly and legally.
Q: Do assets in a revocable trust always avoid probate?
A: Yes, if the trust is properly funded. Any asset you’ve transferred into the trust bypasses probate. Any titles or accounts left outside will still go through probate, so be thorough in funding.
Q: Can I live in my house after putting it in the trust?
A: Yes. As the grantor-trustee, you still own and can live in the property just as before. The trust ownership is legal only; you retain full use of trust assets until your death.