In the United States, a living trust refers to a trust that may be revocable by the trust creator or settlor (known by the IRS as the Grantor). Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs (the probate courts, in some states, charge a fee based on a percentage net worth of the deceased), time, and maintain privacy (the probate records are available to the public, while distribution through a trust is private).
Living trusts also can be utilized to plan for unforeseen circumstances such as incapacity or disability.

The grantor/settlor may also serve as a trustee or co-trustee. In the case where two or more co-trustees serve, the trust instrument may provide that either trustee may act alone on behalf of the trust or require both co-trustees to act/sign. The trust instrument may also provide that the other co-trustee shall act as sole trustee if the grantor becomes incompetent and is unable to continue administering the trust.

Despite the advantages, there are also some negative aspects to a living trust in the United States. Beneficiaries do not save on federal estate or state inheritance taxes. Setting up a trust may be expensive, and the expense is immediate, not delayed till after the grantor’s death. However, in the long run depending on the circumstances, the expense is usually substantially less to set up a trust and the estate administration is generally much faster when compared to probate.

Probate is a judicial process whereby a personal representative is appointed to handle and distribute the assets of a person who has died (the “decedent”). Assets are anything a person owns of value, such as real or personal property, cash, etc.

When is probate needed?
Probate is not always necessary. If the deceased person owned bank accounts or property with another person as joint tenants with the right of survivorship, the surviving co-owner will then own this property automatically. If a person dies leaving very few assets, such as personal belongings or household goods, these items may be distributed among the person’s heirs without the supervision of the court. Sometimes probate is needed to:

- Collect debts owed to the deceased person.

- Clear title to land or stocks and bonds, or large bank or savings and loan accounts that were held in the name of the deceased person only, and put the title to these assets in the names of the heirs.

- Settle a dispute between people who claim they are entitled to what the deceased person left behind.

- Resolve any disputes about the validity of the deceased person’s will.

What happens during the probate process?
- A personal representative is either nominated by the decedent appointed in his or her will or appointed by the court. A personal representative is someone who handles the decedent’s affairs. If a person dies without a will, the personal representative is usually the spouse, child, sibling or other close relative. If none of those people are available or willing to serve as the personal representative, the court may choose a bank, trust company or lawyer.

- The will is proved and delivered to the court. The deceased person’s will is proved by a written statement made under oath by two individuals who witnessed the signing of the will by the deceased person. Each witness must be able to testify that at the time the will was signed, the deceased person was of sound mind and knew what he or she was signing. The original will is filed with the court for the administration of the deceased person’s assets.