Black’s Law Dictionary defines a trust as a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary).

The trustee and the settlor are typically the same party. A settlor’s spouse can also act as a trustee, and other persons can be named trustees upon the death of the settlor or the settlor’s spouse.

Under California law, a living trust is called a revocable trust. Using Black’s again, a revocable trust is one in which the settlor reserves the right to terminate the trust and recover the trust property and any undistributed income. It is called a living trust because it is created and takes effect during the settlor’s lifetime, where a will does not take effect until after death.

The settlor of the trust retains all the benefits of any property placed into it or his or her lifetime. The trustee is a fiduciary, a position of trust and confidence, and is therefore subject to strict responsibilities and high standards of conduct. Upon death, the trustee pays the proceeds to the beneficiaries, a process that may only take weeks.

The creation of a living trust requires:

• The preparation of the trust document, including naming the trustees and successor trustees; and providing for the distribution of the estate.
• Funding the trust with real estate, savings accounts, stocks and bonds, life insurance and personal property.

Any omitted assets are handled by a pour-over will. The pour-over will acts like a broom to sweep the omitted assets into the trust. Assets that are designated to fund the trust in a pour over will are still required to go through probate before entering the trust. But at that point the estate’s value has been reduced dramatically, and the statutory fees to attorneys and appraisers are reduced.