A revocable living trust is a legal entity you create during your lifetime to hold assets. You serve as your own trustee, maintain complete control, and can revoke or amend it at any time. At death, the successor trustee distributes assets according to the trust's instructions without court involvement -- no probate, no public filing, no administrative delay for the assets held inside.

Arizona probate is a public process. For an estate with a home and taxable accounts, a full proceeding typically takes six months to a year and costs 3% to 5% of the probate estate in attorney and court fees. On a $220,000 home and $580,000 brokerage account, that is $16,000 to $40,000 in fees -- paid during the most difficult period of the surviving family's life, with the full asset inventory visible to anyone who searches the court record.

A trust that is never funded is a document without a purpose. Assets must be retitled into the trust's name: the home through a new deed recorded with the county, the taxable brokerage account through retitling at the custodian. IRAs and 401(k)s cannot be owned by a revocable trust -- they must have individual named beneficiaries -- but those beneficiary designations must be coordinated with the trust's distribution intent or a mismatch can override the trust entirely.

A revocable trust is transparent for income tax purposes during your lifetime -- all income is still reported on your personal return. At death, assets held in a properly structured community property trust receive the full Arizona double step-up in cost basis. But a trust that inadvertently converts community property to separate property forfeits that benefit. Arizona specifically recognizes the Arizona Community Property Trust for couples who want to preserve the double step-up on embedded gains.

A revocable trust is not the right primary tool for every household. For couples whose primary assets are IRAs and 401(k)s -- which pass by beneficiary designation outside of probate regardless of whether a trust exists -- the marginal probate-avoidance value is lower. In Arizona, a beneficiary deed can transfer a home at death without probate at a fraction of the cost of a full trust plan. The trust earns its cost when the estate is complex: blended family, multiple properties, minor grandchildren, or distribution controls that a beneficiary designation cannot provide.

For a household with $3.2 million in total assets -- $800,000 in probate-exposed property (home and brokerage) and a blended family -- the cost of a properly drafted and funded trust ($2,000 to $5,000 in Arizona) is one of the highest-returning planning expenditures available. The alternative, probate fees and potential family conflict on that $800,000, can cost $16,000 to $40,000 and a year of administrative burden.

Getting the IRA beneficiary designations right is arguably more important than the trust document itself. A mismatch between the trust's stated distribution intent and an IRA's named beneficiary is a dispute waiting to happen -- and the IRA beneficiary designation wins by law. For any household with a blended family, verifying this coordination belongs at the top of the pre-retirement checklist.

For couples with significant embedded gains in a taxable brokerage account, confirming the trust is structured as a community property trust -- so that transferring assets into the trust does not sever the community property character -- is a material financial decision. Arizona's double step-up can be preserved or forfeited entirely based on how the trust is drafted.

• Drafting a trust but never funding it -- never retitling the home and brokerage account into the trust's name.
• Assuming IRAs and 401(k)s pass through the trust when they pass by beneficiary designation regardless of what the trust says.
• Leaving IRA beneficiary designations unupdated after the trust is created, creating a conflict between the trust's distribution intent and the account's legal beneficiary.
• Using a generic revocable trust template without confirming it preserves Arizona community property status and the double step-up in basis.
• Deciding against a trust solely because the primary assets are IRAs, without accounting for the home and taxable accounts that still face probate.