A living trust is a legal arrangement that, among other things, allows your estate to pass to your heirs after your death without going through the probate court.

A person, called the grantor, sets up a trust and transfers his assets into it, essentially by changing the title from his name to the trust’s. The grantor names a trustee to manage the assets in the trust for the benefit of the grantor’s heirs, who are called the beneficiaries.

At least initially, the grantor can serve as the trustee. The grantor can name someone else as successor trustee, who will manage the trust if the grantor dies or becomes incapacitated.

A living trust avoids the need for an estate to go through probate, which saves time and probate expenses and keeps the details of your estate private. Probate, by comparison, is a public process. A living trust generally does not reduce income or estate taxes. A living trust can be revocable, which means the grantor can change or undo it.

It costs money to set up and maintain a living trust. For some people, especially with smaller estates, the benefits of a living trust might not exceed the costs. There are other ways to avoid probate besides a living trust.

For more information, see http://www.nolo.com/article.cfm/objectID/02B5FD86-BB5F-4F9C-88C5ED4A0D7F64BC/309/227/FAQ/ and http://www.consumerlaw.org/initiatives/seniors_initiative/avoid_scam.shtml.