As an alternative to a will, a living trust is an effective way to distribute property at your death without involving the time and cost of probate.

A living trust is established by first signing a document that includes the trust terms, and then transferring all or most of your assets into the trust. The trust provisions usually state that you are entitled to all of the trust's income and assets during your life. You still own the property and can buy, sell or give away it away as you want. The transactions made by the trust are reported on your personal income tax return.

Upon your death, the trust then provides for the distribution of your assets to your beneficiaries in much the same manner as a will. A successor trustee that you name in the trust agreement carries out the remaining trust duties, similar to how an executor would handle your estate under a will.

A living trust only applies to the assets that are actually transferred into the trust. You should make sure that most of your assets are transferred during your lifetime into the living trust. The remaining assets can be transferred into the trust at your death by using a pour-over will. However, if you have to use the pour-over will, you have defeated the purpose of avoiding probate.

A living trust does have some key advantages. It provides for privacy since the records will not become public (such as during probate for a will), distribution can be quicker because the trustee does not need court supervision, settlement costs are usually lower because there is less court and attorney involvement, less accounting is necessary, and it is harder to challenge because settlement is done privately.