Glossary

Revocable living trust

A trust you create and control during your life that can hold assets or receive life insurance, then distribute them after death without probate.

Also called: living trust, revocable trust, inter vivos trust

A revocable living trust is a legal arrangement you set up while alive, usually naming yourself as trustee and a successor trustee to take over at your death or incapacity. You can change or cancel it at any time. Its main purpose is to manage and pass on assets without probate and with more privacy than a will.

Life insurance can work with one in two ways. Most often, the trust is named as beneficiary, so the proceeds flow to the successor trustee, who manages them under the trust's terms. That's useful when beneficiaries are minors, have special needs or shouldn't get a lump sum. Less commonly, the trust owns the policy. Hypothetically, a parent with young children might name the trust as beneficiary of a $1 million policy, with instructions to pay for school and distribute the rest in stages at ages 25 and 30.

A revocable trust doesn't reduce estate taxes. Because you keep control, its assets, including a policy you own through it, count in your taxable estate. Families concerned about estate tax use an irrevocable life insurance trust (irrevocable life insurance trust) instead. A revocable trust also doesn't protect assets from your own creditors during your life. See naming a trust as your life insurance beneficiary.

Last reviewed October 4, 2026

In the index now

Related terms

Trustee The person or institution that holds legal title to trust assets and manages them for the beneficiaries under the trust's terms and fiduciary duties. Irrevocable life insurance trust (ILIT) A trust that owns life insurance and can't be changed or revoked by its creator, keeping the death benefit out of the insured's taxable estate. Testamentary trust A trust written into a will that comes into existence only after death and probate, often to manage money for minor children. Probate The court-supervised process of validating a will, paying a deceased person's debts and distributing what's left, which life insurance usually avoids. Beneficiary designation The signed instruction on file with an insurer naming who receives a policy's proceeds, in what shares and in what order. Estate tax A federal tax on the transfer of a deceased person's assets above an exemption amount, with a top rate of 40%; some states levy their own.

Related guides

Using life insurance in an estate plan The jobs life insurance does in an estate plan, from income replacement to paying estate taxes, and the ownership choices that decide whether it helps. Naming a minor child as life insurance beneficiary Insurers won't pay a minor directly. Compare a court guardianship, a UTMA custodian and a trust for children's life insurance money, and how to set each up. Naming a trust as your life insurance beneficiary When a trust makes sense as a life insurance beneficiary, which kinds of trust work, how to name it on the form, and the mistakes that send the money astray.