When doing your estate planning, making the decision between a Will vs. a Revocable Living Trust is an important question that needs to be addressed during the initial planning stage. Generally, both Wills and Living Trusts can accomplish the same end results. The decision between a Will and a Revocable Living Trust is really a question about the “process” of transferring your assets to your designated beneficiaries.
When deciding between a Will and a Living Trust consider asking yourself the following questions:
- What process do you want your heirs to go through upon your death?
- How much is the process going to cost your heirs?
- How much do you want the Court to be involved?
- How long is the process going to take?
- How much privacy do you want over the process?
- How much control do you want over the process?
- How much assistance will your heirs need from an Estate attorney?
Probate is the court supervised legal process of proving a Will and distributing your property after you die, which can be lengthy, complex and a burden on your loved ones. Most of the advantages of having a revocable living trust compared to a Will involve avoiding probate and making the process of transferring your assets to your beneficiaries easier, faster, and more affordable. The table below outlines some of the main differences between utilizing a revocable living trust in your estate planning compared to only having a Will.
Pros and Cons of a Will vs. Living Trust
|With a Will||With a Living Trust|
|Incapacity||Court appoints Conservator or Guardian of the Estate who controls all your assets and expenses and must annually account to the Court how your money is being spent.||Prevents Court control of assets at incapacity. The individual you choose manages your financial affairs for your benefit.|
|Probate Court Costs||You pay all Probate filing fees, court costs, and asset fees for every dollar that goes through probate.||None.|
|At Death||Estate administration (Probate): This process includes properly completing and publicly filing affidavits, inventories, accountings, notices and releases.||No Estate Administration. Avoids Probate. The Successor Trustee simply distributes assets according to your wishes.|
|Legal Fees||Statutory executor fees, legal fees are typically much higher due to complexity of estate administration and time involved.||Inexpensive, easy to set up and maintain.|
|Real Property||Ancillary estate administration must be done in every county in which you own real estate.||No ancillary administration for real estate titled in your trust.|
|Creditor Protection||None. Creditors have a right to make claims against the assets of in your estate.||You can include spendthrift provisions to protect your beneficiaries from creditors after your death.|
|Time||On average a 1 year delay in distributions to heirs.||No delays in distributing assets to trust beneficiaries.|
|Flexibility and Control||Limited: you can change your Will at any time, but it can easily be contested. Family has no control over probate timeline.||Total: You can change your trust at any time even discontinue it. You remain under total control of your assets, even if you are disabled or even after death.|
|Privacy||All Estate administration filings are public record. Exposes family to Unscrupulous solicitors and greedy heirs.||Privacy preserved. Living trusts are not public record. Everything is kept in the family.|
One common misconception is that wills and trusts are exclusive from each other and you will decide “I only want a Will” or “I only want a Trust.” Even with an estate plan that includes a revocable living trust, you still need a Will. Your living trust estate plan should include a “pour-over Will” that has a catch all provision transferring your residuary estate into your Trust. The pour-over Will simply directs that any assets you still own in your own name rather than in the name of your trust should transfer to the trust upon your death. Additionally, the need for a Will goes beyond omitted asset transfers. For example, if the circumstances of your death give rise to a legal action for wrongful death or other claims, the Executor named in your Will would have standing to bring those claims on behalf of your estate. On the other hand, a Will can include a “Testamentary Trust,” which is a trust created upon your death. Since the testamentary trust is a trust within your Will, it does not avoid probate. As such, a typical estate plan can include a combination of a Will and a Trust.
Is a Revocable Living Trust right for you?
Revocable living trusts are becoming increasingly more popular, even for clients with modest estates. However, there is no one size fits all estate plan. Speak with an estate planning attorney to discuss whether a revocable living trust makes sense for you.