Revocable Living Trust vs. Last Will and Testament
Learn the advantages and disadvantages between a last will and testament and a revocable living trust and which one might be right for you.
We are faced with options day in and day out. Some are simple: Would you like cream and sugar with your coffee? Others are more complex, like what type of estate you will set up to protect your assets, who will care for your children in the event that you pass away, and what your medical care will look like at the end of your life.
A 2020 Gallup Poll discovered that only 46% of Americans have a will directing how they want their money and estate handled after their death. Tomorrow isn’t promised, so planning for the future now is the best way to care for your loved ones when you are no longer here. The first step in planning is knowing the tools available to you. Estate planning tools like a last will and testament and a revocable living trust each serve a specific purpose. Follow along to learn about wills and trusts–discover the advantages and disadvantages of each.
What is a Last Will and Testament?
A last will and testament functions as a set of instructions- think of your will as a step-by-step guide laying out your wishes, your chosen beneficiaries, and steps to manage the closing of your estate. Your last will and testament might designate who will inherit your vehicle, who will care for your children or pets, and who will be the executor of your will, ensuring that all of your wishes are executed in the way you laid out.
What is a Revocable Living Trust?
A revocable living trust is an estate planning tool that involves moving your assets into a trust managed by a trustee. A trust goes into effect immediately and protects your assets and privacy.
Advantages of a Revocable Living Trust vs. Last Will and Testament
Advantages of a Revocable Living Trust:
Immediate implementation: A trust goes into effect immediately after it is funded and signed.
Avoidance of probate: Assets held in a trust do not go through probate, which is the legal process of transferring assets from the deceased to their beneficiaries. Keeping assets in a trust can save time and money and help keep the distribution private.
Control over assets: A trust can provide more control over how and when assets are distributed to beneficiaries. A revocable living trust can be particularly useful for individuals with minor children or beneficiaries with special needs.
Asset protection: A trust can protect assets from creditors, lawsuits, and other claims if specific parameters are set around the beneficiary’s duties before assets are distributed.
Legacy: A trust can create a sense of legacy and reflect values important to the Guarantor.
Advantages of a Last Will and Testament:
Simplicity: Wills are generally simpler and less expensive to create and administer than trusts.
Flexibility: Wills can be changed or revoked anytime, whereas trusts are more difficult to change once they have been established.
Accessibility: A will is easily accessible and an excellent first step in working towards a comprehensive estate plan. This tool allows immediate naming of guardians for children and pets, designates who assets will be distributed, and lays out all final wishes and arrangements.
Disadvantages of a Revocable Living Trust vs. Last Will and Testament
Disadvantages of a Revocable Living Trust:
Cost: Setting up a trust can be more expensive than a will and typically requires the services of an attorney. Additionally, ongoing expenses may be associated with maintaining the trust, such as accounting and legal fees.
Complexity: Trusts can be complex legal instruments, and it may be difficult for some individuals to understand the terms and conditions of the trust fully.
Limited flexibility: Trusts are often inflexible and difficult to change once established. This can be a problem if the grantor’s circumstances or the needs of the beneficiaries change over time.
Disadvantages of a Last Will and Testament:
Probate: One of the main disadvantages of a will is that it typically goes through probate, which is the legal process of transferring assets from the deceased to their beneficiaries. Probate can be time-consuming and expensive, and it can also make the distribution of assets a matter of public record.
Limited control: A will only takes effect after the principal’s death, which means the principal has limited control over how and when their assets are distributed to beneficiaries, especially if an executor was not selected to carry out the last will and testament.
The Bottom Line: Revocable Living Trust vs. Last Will and Testament
In general, revocable living trusts are more useful when individuals want more control over their assets and how it is distributed after death. Choosing a revocable living trust over a last will and testament can avoid the costly and time-consuming probate process.
Wills are more useful for individuals who want to keep things simple and straightforward and those with fewer assets to distribute. A will may also be better if the guarantor’s debts outweigh their assets. In cases with outstanding debts, it can be beneficial to go through the probate process because creditors have a limited time to seek the money they are owed. If the assets are in a trust, there is unlimited time for creditors to request the debts be settled.
Families might be better positioned in certain situations to have the probate process play out so all debts are accounted for. In many cases, clients will have both a will and a trust as part of their estate plan since a will functions as a directive and a trust functions as a layer of asset protection.
Mobile Estate Planning Made Easy
The process of getting a legitimate will in place for you and your family can be overwhelming, confusing, and costly, but it doesn’t have to be! At Assurest, we offer simple, affordable solutions for your legal needs and make the process easy by coming to you for the conversation—meeting you in your home or, if you prefer, virtually or over the phone.
Serving clients throughout Virginia, our experienced and trustworthy professionals simplify the process using clear, understandable language free of legal jargon and provide flat-rate packages, so you’re never surprised by the bill. Contact us today and rest assured that your affairs are in order and your loved ones are protected.
Disclaimer: This material is intended for general information purposes only and does not constitute legal advice. Responses to inquiries, whether by email, telephone, or other means, do not constitute legal advice, nor do they create or imply the existence of an attorney-client relationship.