A living trust is an estate planning tool that facilitates the transfer of your assets to your family members and, because it is revocable, you can amend it at any time to add or change beneficiaries, trustees or assets. After your death, the trust becomes irrevocable and all of its provisions must then be executed by a person you designate as the trustee.

The key reasons why you need one:

• Allows your assets to avoid probate: Unlike a will which must be settled in a probate court, a living trust passes all assets outside of probate which saves money and time.
• Makes it a family affair: Wills become part of the public record; however, trust matters are kept private.
• Ensures a smooth transition: The trustee can continue to manage your assets after your death to provide for income or determine the best timing for asset sales.
• Ensures continuity: You can name successor trustees who can step in to carry out the provisions of the trust should your designated trustee be unable to do so.

As a legal document, a living trust is fairly easy to set up and not too expensive (around $1200). You still need a will, because, although the living trust is the mechanism for distributing your assets, your will actually executes the trust.