A private arrangement that can provide for the management of your property is a funded trust. There are many different types of trusts, such as living, testamentary, revocable, and irrevocable trusts. A testamentary trust is usually created in a will and becomes operative when you die. A trust that is set up separate from a will during a person's life is called a living trust. The most common and popular trust is the revocable living trust ("RLT"). (We limit our discussion of trusts here to RLT's.) An RLT is created by signing a written document called a trust agreement. The RLT is funded by transferring ownership of property to the trustee of the RLT. No minimum amount of money or property is required to set up an RLT.

The trustee is the owner and manager of the trust fund. Generally, the trustee is responsible for investing the trust assets, collecting the trust income, distributing funds to beneficiaries, and other administrative duties. A person or financial institution can serve as the trustee. Most people act as their own trustee and then designate successor persons or a financial institution to take over as trustee when they are no longer able to serve as their own trustee.

Having an RLT is particularly useful when you have transferred all of your property to your RLT, because if you become incapacitated, your trustee can just continue managing your trust property for you. Your trustee would not, however, have authority over any of your property that was not put into your RLT.

An RLT is called revocable because you have the power to change or terminate the trust during your life. It is called a living trust because it is established and becomes active during your life, as opposed to some trusts that become active only upon your death.

Generally, an RLT is involved in managing only your property. Therefore, we recommend that if you set up an RLT to manage your property, you also give someone POA’s to manage your personal affairs and health care if you become incapacitated.

A significant difference between RLT’s, guardianships, and POA’s is that RLT’s generally do not end when you die, while guardianships and POA’s do. An attractive feature of the RLT is that the property in the RLT does not need to go through probate after your death. We mention avoiding probate now to point out that an RLT can serve the dual purpose of managing your property both before and after your death.