What Makes Trusts More Reliable Than Wills?

You finally decided to make an estate plan. But now you must choose between a will and a trust. Most of us are mainly concerned with transferring assets to our loved ones. Both are reliable documents for doing that. So, which should you use? The answer comes down to several factors, like your desire to avoid probate and how much privacy you want. Of course, the cost is a factor also.

This article explains the advantages and disadvantages of wills and revocable living trusts. State laws vary. An estate planning attorney experienced in setting up trusts can give you legal advice about your situation.

What Is an Estate Plan?

An estate plan expresses what you want to happen when you’re incapacitated and after you die. There are several estate planning tools available to ensure your wishes are followed. The following are the primary tools:

• A will or a revocable living trust (RLT) has your instructions for how you want your property distributed after you die.
• A health care power of attorney names someone to make medical decisions for you when you can’t.
• A financial power of attorney names someone to take over your financial affairs when you’re incapacitated.
• A living will has your wishes for end-of-life treatment.

What Is a Will?

A last will and testament (will) is a legal document. It says how you want your property divided after you die. You name your personal representative in your will. You can also name a guardian for minor children and express your wishes for what happens to your remains.

A will becomes effective once you die. Your estate will have to go through probate if you have a will. Probate is a legal process supervised by the probate court. It’s the process of administering your estate and distributing your property. Depending on your state, the probate process can be time-consuming and expensive. Since probate is a public court process, it’s a matter of public record. That means people can find out you died and see who’s inheriting your property.

What Is a Trust?

The revocable living trust (RLT) is the primary type of trust used in estate planning. An RLT is a legal document. In it, you entrust someone to manage your property for the benefit of a third party. The person who manages your property is the trustee. The beneficiaries are the people who benefit from your trust. If you make a trust, you’re the grantor, settlor, or trust maker.

An RLT becomes a legal entity when you sign the trust document. You transfer your property to the RLT, where the trustee manages it. Real estate is the most common asset owned by an RLT. In most cases, you name yourself the trustee of your RLT. So even though the trust owns the property, you still control it.

The terms of the trust include your instructions for dispersing your property. You name someone as your successor trustee. When you die, your RLT becomes irrevocable. Your successor trustee distributes the trust assets to your named beneficiaries according to the trust agreement.

Revocable Living Trust vs Will, Which Is Better?

Generally, anything you can do in a will, you can do in an RLT, and vice versa. The main differences between them center on probate and privacy. Remember, a will has to go through the public probate process, and an RLT doesn’t.

Many people opt for an RLT to save their family members the hassle of probate. Your successor trustee can also start the distribution of your assets sooner. Since an RLT doesn’t go through probate, it offers an extra layer of privacy over a will. But some people prefer probate because it’s court-supervised.

When it comes to cost, an RLT will likely cost you more. But many people view the cost savings of not going through probate as worth the extra cost.

Some people think an RLT gives them asset protection and tax benefits. But an RLT won’t give you those advantages because it’s revocable. An irrevocable trust may better suit you if those are your goals.

Contact an Estate Planning Attorney for Help

Whether you choose a will or an RLT in your estate plan depends on your goals. Each has advantages and disadvantages you must evaluate. Contact an experienced estate trusts attorney for help. They can advise you about your options and help meet your estate planning needs.