Revocable Living Trusts and Wills
When we consult with clients, the primary objective is to explain the differences between a Will and a Revocable Living Trust to determine what is most appropriate. The document chosen will serve as the foundation of an estate plan. Although there are fundamental differences between a Will and a Revocable Living Trust, they both serve the same purpose: they allow a client to direct how and when assets will be distributed to beneficiaries, and to appoint who will make important decisions on behalf of you and your heirs.
A Will is created to control the distribution of assets through probate upon a client’s death. A Will appoints an Executor to represent the estate of the deceased client in probate court. A Will allows for the appointment of guardians for minor children and to direct funeral arrangements (i.e., burial or cremation). The downside to the use of a Will in lieu of a Revocable Living Trust is that: (i) probate is time-consuming and expensive; (ii) there is no privacy as to the persons that inherit your assets as your Will becomes public record; (iii) life insurance and other assets with beneficiary designations are not controlled; and (iv) there is limited room for customization and provides no protection to your heirs from creditors and financial predators.
A Revocable Living Trust functions as a private contractual agreement that outlines the rules a client wants regarding the assets be held for the benefit of heirs and other beneficiaries. A client is able to design a plan that stretches out distributions to beneficiaries over a period of time while protecting such beneficiaries from creditors. There are many additional benefits to using a Revocable Living Trust in lieu of a Will. It is an excellent tool when a client attains an age or has a medical condition that mandates assistance with finances. Further, if a client is concerned that heirs may contest the client’s estate, a Revocable Living Trust can mitigate such risk by inserting provisions making a challenge risky and expensive to such disgruntled heir. A Revocable Living Trust is convenient in that it will circumvent probate entirely making it less costly and simpler for the person appointed to manage your estate. Should you own real estate in more than one state, you can avoid probate in multiple jurisdictions by deeding ownership of said properties into a Revocable Living Trust.