A living trust, which you set up and use during your lifetime, can be an attractive estate planning vehicle. The principal benefit is that you can control, change, or revoke a living trust at any time. It is popular because the assets in it do not pass through probate, thereby avoiding probate costs and also speeding up distribution to your spouse, children and other heirs. However, for tax purposes, living trusts are part of your taxable estate and there are legal and administrative costs involved.
Be aware: You must legally transfer title to the trust because the trust must actually own the assets if it is to be effective. Consult with your advisers before undertaking such a move. Also keep in mind that any income generated from a living trust is still taxable income to you.