When it comes to estate planning, one of the most common questions people have is whether they should use a revocable living trust or a will as their primary planning tool. Both serve essential roles in ensuring your assets are passed on according to your wishes, but each has distinct advantages and limitations. Ultimately, deciding which tool is right for you depends on your specific needs, goals, and personal preferences.

 What Is a Will?

A will, formally known as a "last will and testament," is a legal document that outlines how your assets will be distributed upon your death. It can specify who receives specific property, name guardians for minor children, and appoint an executor to manage the distribution of your assets according to your instructions. Here's what you need to know about the benefits and drawbacks of wills:

Benefits of a Will

1. Simple and Straightforward 

   Creating a will can be a relatively simple process, especially if your estate is straightforward. A will doesn't involve the complexity of funding assets, as is the case with a trust. For individuals with minimal assets or a straightforward distribution plan, a will may cover all necessary bases.

2. Flexibility for Small Estates 

   For individuals with limited assets, a will is often the most cost-effective solution. It works well when there's no need for ongoing asset management or detailed estate tax planning.

3. Ability to Name Guardians for Minors 

   One of the most crucial features of a will is the ability to name a guardian for minor children. This ensures that your children will be cared for by someone you trust if you pass away before they reach adulthood.

4. Control Over Asset Distribution 

   With a will, you can specify who gets what and whether the inheritance will pass outright or in a protective trust, ensuring your assets are divided according to your wishes. This can be a helpful tool if you have particular items you'd like to go to specific individuals.

Drawbacks of a Will

1. Probate Requirement 

   A significant downside of a will is that it must go through probate, a court-supervised process where the will is validated, debts are settled, and assets are distributed. Probate can be time-consuming, often taking nine months to a year or even longer if there are disputes or complications. In addition, probate is a public process, meaning the details of your estate, including assets and beneficiaries, become public record.

2. Limited Privacy 

   As mentioned, probate is a public proceeding. This means that anyone can access information about your estate on the county website, potentially creating privacy concerns for your heirs. A will does not offer the level of privacy that some clients may desire.

3. Doesn't Address Incapacity 

   A will only takes effect upon your death. If you become incapacitated, it won't authorize someone to manage your assets or make decisions on your behalf. This can lead to the need for court-appointed guardianship, which can be cumbersome and emotionally taxing for your loved ones. We provide Financial Power of Attorney documents to help our clients name agents who can act on their behalf in the event of incapacity.

 What Is a Revocable Living Trust?

A revocable living trust is a legal entity you can establish during your lifetime to hold and manage your assets. You retain control of the trust during your life, allowing you to make changes or even dissolve it if desired. Upon your death, the trust becomes irrevocable, and the assets are distributed according to your instructions in the trust document.

Benefits of a Revocable Living Trust

1. Avoids Probate 

   Perhaps the most well-known advantage of a revocable living trust is that it avoids probate. Because the assets are technically owned by the trust, not by you personally, they can be transferred to your beneficiaries without going through the probate process. This can save time and money, as well as offer privacy for your family.

2. Privacy Protection 

   Unlike a will, a living trust is a private document. Upon your death, the distribution of your assets remains confidential, which can protect your family from unwanted scrutiny or even disputes.

3. Incapacity Planning 

   A revocable living trust also helps in situations where you may become incapacitated. The trust can designate a successor trustee who can step in and manage your assets on your behalf, avoiding the need for court-appointed guardianship and ensuring continuity in managing your estate.

4. Control Over Asset Distribution 

   Like a will, a revocable trust allows you to specify how and when your assets are distributed and whether distributions are to be made outright or whether you will protect the inheritance using trusts.

Drawbacks of a Revocable Living Trust

1. Higher Initial Costs 

   Setting up a revocable living trust generally requires more upfront time and cost than a will. The document is more complex, and legal fees may be higher due to the additional planning involved.

2. Ongoing Maintenance 

   For a revocable living trust to work effectively, you must “fund” it by transferring ownership of your assets into the trust. This includes re-titling bank accounts, real estate, and other assets to be held by the trust. Failing to fund the trust properly could result in assets going through probate, negating some of the trust's benefits.

3. Less Flexibility with Small Estates 

   For individuals with limited assets or simple estates, a living trust may be more than they need. The added costs and maintenance might not be justifiable if probate avoidance and incapacity planning aren't a priority.

 So, Which Is Better?

The answer depends on your unique goals and circumstances. If you have a simple estate and you're not overly concerned about privacy or avoiding probate, a will can be a straightforward and effective solution. It allows you to direct how your assets will be distributed, name guardians for your children, and provide for a clear transfer of your estate after your death.

On the other hand, if you have a more complex estate or if privacy, probate avoidance, and incapacity planning are top priorities, a revocable living trust may be the better choice. While it does require more upfront planning and ongoing maintenance, it can provide peace of mind knowing that your affairs are in order and that your family will be spared the time and expense of probate.

 Conclusion

Both a will and a revocable living trust can be effective tools in your estate plan. The right choice depends on your priorities—whether it's simplicity, cost, privacy, or control. A qualified estate planning attorney can help you weigh the benefits and drawbacks of each option and tailor a plan that meets your individual needs. Remember, estate planning is about creating peace of mind for you and your loved ones, and there's no one-size-fits-all solution. I invite you to use the link below to schedule a free consultation with my office, and together we can find a solution that best meets your unique needs:

https://letsmeet.io/scottlynett/free-15-min-consult-phone