In order to set up a living trust, the grantor or settler transfers the ownership of his assets from himself to a trustee of that trust (frequently the trustee of the trust and the grantor are the very same individual) for administering the same for the benefit of himself and at least another person. The trust may also specify the remainder beneficiaries who can take only after the grantor dies. Usually the beneficiaries are not entitled to anything during the lifetime of the grantor.
Living trusts are revocable by the grantor or settler or author. One of the ways of avoiding probate is to institute a living trust which is a separate entity. Through the mode of living trust assets and properties may pass to the heirs of the grantor without the costly and cumbersome legal ritual of probate. Avoiding probate results in substantial cost savings and ensures confidentiality and privacy since records of probate proceedings are open to the public.
In spite of material advantages of living trusts, there are certain demerits as well. There are no savings either on federal estate tax or state inheritance tax. Moreover, setting up of a living trust in itself is a very costly proposition and such expense is payable immediately and cannot be deferred. In the long run, however, estate administration is much faster and smoother with living trust than probate.
In the event of failure of a living trust, the property will be held for the grantor in the resulting trust.
Upon the death of the grantor or author, the trust is not part of the probated estate of the deceased and is outside the domain or jurisdiction of the probate court.
Revocable living trusts are being increasingly used as a substitute for Will to skip the legal ritual of probate.
(More http://www.oag.state.ny.us/seniors/living_trust.html)
| 
