A Living Trust is a type of trust which takes effect during the lifetime of the trustor for the management and distribution of property or funds by the trustee to the designated beneficiary in accordance with the conditions set forth in the trust. A living trust may be revocable and irrevocable. A revocable trust can be cancelled by the trustor anytime such that upon his death, it remains part of his estate and therefore subject to estate tax. An irrevocable trust, on the other hand, can never be cancelled by the trustor once signed and executed. Since it takes effect during the lifetime of the trustor, an irrevocable trust is subject to donor's tax and is excluded from the trustor's estate upon his death. A living trust can set forth conditions in distributing property or funds but subject to the laws on legitimes.
In estate planning, a living trust, under the Philippine setting, may be a good probate avoidance tool but may not be as effective in avoiding taxes.