What Is a Living Trust? How It Works and How to Fund It

A living trust is a legal arrangement you create during your lifetime to hold your property, and you can usually change or cancel it while you're alive. It works only for the assets you actually move into it, which means a new deed for your home and a retitling form or beneficiary change for each account.

This article is general legal information, not legal advice. Laws vary by state and situation, and reading it does not create an attorney-client relationship. For advice about your case, talk to a licensed attorney.

Key takeaways

• A living trust controls only property titled in its name or assigned to it in writing.
• Retirement accounts stay in your name; you update the beneficiary form instead.
• If you live in the home and stay a beneficiary, a lender can't call the mortgage over the deed to your trust; a rental or second home isn't protected.
• In California, a successor trustee taking over at a death has 60 days to notify beneficiaries and heirs, which starts a 120-day contest window.
• A trust can manage a child's inheritance, but it isn't where you name a guardian.

How does a living trust work? The four roles

A living trust has four roles, and you can hold three at once. Section numbers are from the Uniform Trust Code (UTC), the Uniform Law Commission's model trust law.

• The grantor (also called the settlor or trustor) creates the trust and puts property into it (section 103).
• The trustee holds title and manages the property. You can be your own trustee; the UTC's bar on overlap applies only to someone who is both sole trustee and sole beneficiary (section 402).
• The successor trustee takes over when you die, resign or can't manage, in the order the document lists.
• The beneficiaries are you first, then the people or charities you name. After your death, "qualified beneficiaries" (those who can receive distributions now or are next in line) have a right to be kept informed (sections 103 and 813).

While the trust is revocable, the trustee's duties are owed to you alone (section 603). Revocable vs. Irrevocable Trust covers trusts you can't take back.

What the trust document and a certification of trust do

The trust document sets the terms: who serves as trustee and successor, what the trustee may do, how your incapacity is decided, and who receives what and when. Most UTC rules are defaults the document can override, apart from a short list in section 105 that includes the trustee's duty of good faith.

A certification of trust is a short signed statement that the trust exists, when it was signed, who the settlor and current trustee are, what the trustee can do, whether it's revocable, how co-trustees sign and how to take title, but not who inherits (UTC section 1013). Someone who relies on it in good faith is protected.

California requires the certification to be an acknowledged declaration (signed before a notary) by every acting trustee, lets you record it, and makes a business that demands the full trust in bad faith liable for damages including attorney's fees (Probate Code section 18100.5). Florida's version leaves out the tax ID number and has no damages clause (section 736.1017).

## Funding a living trust, asset by asset

Recorders, banks and the DMV go by their own records, and the UTC tells trustees to make the trust's interest show in records others keep (section 810), so each asset gets its own step.

Asset	How it gets in, or why it shouldn't	Rule or form
Home and other real estate	Sign a deed to yourself as trustee, have it notarized and record it where the property sits, including in any other state.	California: no reassessment (Rev. & Tax. Code 62(d)); a deed must be acknowledged to be recorded (Gov. Code 27287); file a Preliminary Change of Ownership Report with it or the recorder may charge $20. Federal: on a home of under five units that you live in, the lender can't call the loan over the transfer while you remain a beneficiary and occupant, unless you refuse to give it a way to learn of later transfers (12 U.S.C. 1701j-3(d)(8); 12 C.F.R. 191.5(b)). A rental or second home isn't covered, so ask the lender first
Bank accounts	Retitle accounts and CDs to the trust, or name the trust as payable-on-death beneficiary.	FDIC: the title must identify a trust (12 C.F.R. 330.10(d)); insured to $250,000 per beneficiary, up to $1,250,000 per owner at one bank
Brokerage accounts	Re-register the account to you as trustee on the firm's form, or make the trust the transfer-on-death beneficiary if the firm allows it.	The firm's form; it may ask for a certification of trust
Retirement accounts and life insurance	Keep them in your name and update the beneficiary forms. Name the trust only if you want the trustee to manage the payout; naming your estate sends the money through probate.	401(k) benefits can't be assigned (26 U.S.C. 401(a)(13)); an IRA is an individual's account (26 U.S.C. 408(a)); a trust named as beneficiary faces the see-through trust rules (26 C.F.R. 1.401(a)(9)-4(f))
Vehicles	In California, enter the trust and trustee as new owner on the back of the title and submit it.	DMV procedure 11.180: a Statement of Facts (REG 256) for the smog and tax exemption; blocked while parking or toll fines are unpaid
Business interests	Assign LLC interests or shares to the trustee in writing, after checking the operating or shareholder agreement for consent rules.	If you're a U.S. citizen or resident, a revocable trust can hold S corporation stock, and keep it for two years after your death (26 U.S.C. 676, 1361(c)(2)(A))
Personal property	Sign an assignment of your belongings to the trustee, or rely on a declaration in the trust that you hold them as trustee.	UTC 401(2); Cal. Prob. Code 15200(a)

A California trustee who later finds an asset that never made it in can petition the probate court to confirm the trust's claim (Probate Code section 850). To check whether what's left in your own name would need probate, try the Probate Checker.

What the successor trustee does if you become incapacitated

Your trust document sets the test for incapacity (a written finding by one or two doctors, for example). The successor accepts by acting as trustee or by following the trust's acceptance method (UTC section 701), then manages trust property under its terms, keeping records and keeping it separate (section 810).

The successor's authority stops at the trust's edge. Accounts or a car still in your own name need your agent under a durable power of attorney, and that agent can amend or revoke the trust only if the trust or the power of attorney expressly says so (UTC section 602(e)).

A successor trustee's first months in California, with dates

Say a widowed mother in Fresno dies on Monday, March 9, 2026. She was the sole trustee of a revocable trust that holds her house, and her daughter is the successor trustee. The dates are a sample; the rules are California's.

Date	Day	What happens	Rule
Mon., March 9, 2026	0	Death. The trust becomes irrevocable, and the trustee's office is empty.	Prob. Code 16061.7(a)(1); 15643(d)
Mon., March 16	7	The daughter starts serving, gets an EIN for the trust and gives the banks a notarized certification of trust.	IRS EIN guidance; Prob. Code 18100.5(c)
Mon., April 20	42	She mails the notification by trustee to every beneficiary and heir. Mail service is complete the day it's mailed.	Prob. Code 16061.7(b), 1215(a)(4)
Fri., May 15	67	Last day for the notice: 60 days from when she began serving, because the death left the office vacant. Had she been a co-trustee already, it would have been May 8, 60 days after the death.	Prob. Code 16061.7(f)
Fri., July 31	144	Her brother, an heir, asked for the trust's terms; she mails him a complete copy.	Prob. Code 16061.7(g)(5)
Thu., Aug. 6	150	Deadline to file a change in ownership statement for the house with the county assessor.	Rev. & Tax. Code 480(b)
Tue., Aug. 18	162	Contest deadline for everyone served on April 20 whose requested copy, if any, was mailed by June 19.	Prob. Code 16061.8
Tue., Sept. 29	204	Her brother's contest deadline: 60 days after his copy was mailed, which is later than August 18.	Prob. Code 16061.8

California treats knowingly exercising a trustee's powers or duties as accepting the trust (section 15600(a)(2)), so serving can start before any paperwork. To be safe, count the 60 days from the date of death.

The notice must tell recipients they can get a copy of the terms and carry a bold-type warning about the contest deadline (section 16061.7(g), (h)). A trustee who skips it can owe the resulting damages, attorney's fees and costs (section 16061.9).

Elsewhere the clocks differ: the UTC's model contest limit is the earlier of three years after the death or 120 days after the trustee sends a copy of the trust and a notice (section 604); Florida allows six months after such a notice (section 736.0604).

## What a trust can and can't do for your children

A trust can hold a child's share past 18, when minority ends in California (Family Code section 6500), and pay for school, rent or medical bills under standards you write. It can also keep the share from the child's creditors until it's paid out: in Texas, saying an interest is held in a "spendthrift trust" blocks transfers, voluntary or to a creditor, before the trustee pays it (Property Code section 112.035).

The trustee has no say over where a child lives. If no parent can care for a child, state guardianship law decides who will, giving weight to a parent's nomination in a will or, in some states, another signed writing; the Uniform Probate Code allows either (section 5-202). California accepts a nomination in any signed writing, which can be set to take effect only on your later absence, legal incapacity or death. It generally applies only if the other parent agrees, has died or can't consent, and the judge gives it due weight (Probate Code sections 1500 and 1502). Will vs. Living Trust has a table of five states' signing rules for a separate nomination.

For money outside the trust, such as a life insurance policy naming the child, California lets the person who gave or left it nominate a guardian of the estate to manage it (section 1501).

When an estate planning lawyer should set up or review a trust

Have a lawyer draft the trust, or check yours, if:

• you own real estate in more than one state, or a mortgaged rental or second home;
• you want the trust named on an IRA or 401(k);
• you own an LLC interest or S corporation shares;
• you have minor children and no signed guardian nomination;
• you've moved to another state since signing;
• you're a new successor trustee and an heir left out of the trust will get the notice.

Ask whether the fee covers the funding work or only the documents. To compare a few local firms, our estate planning lawyer listings are organized by city.

Frequently asked questions

Does a living trust have to be notarized or recorded?

The trust document usually isn't recorded. The UTC's requirements for creating a trust don't include a notary (section 402), but states can add formalities: Florida voids the parts that take effect at death unless a Florida resident signs before two witnesses, as for a will (sections 736.0403 and 732.502). Your home's deed is recorded, and California records one only after your signature is acknowledged before a notary (Government Code section 27287).

Does a living trust need its own tax ID number?

Usually not while you're alive and can revoke it. IRS regulations let the trustee give banks and brokerages your name and Social Security number instead (26 C.F.R. 1.671-4(b)(2)). At your death the trust becomes irrevocable, and the IRS says a revocable trust that changes to an irrevocable one needs a new EIN.

What happens if the successor trustee doesn't want the job?

They can decline. Under the UTC, a named trustee who doesn't accept within a reasonable time after learning of the role is treated as having rejected it (section 701). The next named successor steps in; if none is left, the qualified beneficiaries can appoint one unanimously, or a court will (section 704).

How long does a successor trustee have to distribute the trust?

The UTC sets no fixed number of days. When the trust ends under its terms, the trustee must distribute "expeditiously," keeping a reasonable reserve for debts, expenses and taxes (section 817). A beneficiary who gets a proposed distribution and doesn't object within 30 days loses the right, if the proposal explained it.