The Benefits of a Revocable Living Trust Over a Simple Will

Estate planning is all about making sure your assets go where you want them to after you pass away. To this end, people often think that a simple will is the obvious solution. However, a lot of folks are finding out that a revocable living trust has some real benefits over a will.

Let’s dive into these benefits and see why they matter. But before diving into the advantages, it’s essential to understand exactly what these two estate planning tools are in a general sense.

What Is a Revocable Living Trust?

A revocable living trust is a legal document created during an individual’s lifetime. Assets are placed into a trust for the benefit of the creator while they are living, and then transferred to designated beneficiaries at their death by a chosen representative, called a trustee.

What Is a Simple Will?

A simple will is a legal document that outlines how your assets should be distributed after death. It appoints an executor who will manage the estate until its final distribution.

Advantages of a Revocable Living Trust

1. Avoiding Probate

One of the most significant advantages of a revocable living trust is avoiding probate – the legal process through which a will is reviewed to determine whether it is valid and authentic. Probate can be time-consuming and costly, whereas assets in a revocable trust can be distributed without court intervention.

2. Privacy Protection

Unlike a will, which becomes a public record during probate, a trust remains private. This privacy is crucial for those who prefer to keep their financial affairs and beneficiaries confidential.

3. Flexibility and Control

With a revocable living trust, you retain control over your assets during your lifetime. You can alter, amend, or revoke the trust at any time. This flexibility allows you to adapt your estate plan as your situation changes.

4. Seamless Transition Upon Incapacity

If you become incapacitated, a successor trustee can step in without court intervention. This seamless transition ensures that your affairs are managed according to your wishes, without the need for a guardianship or conservatorship proceeding.

6. Protection Against Legal Challenges

Trusts are generally harder to contest than wills. This means your wishes are more likely to be carried out as you intended.

7. Planning for Special Circumstances

If you have a beneficiary with special needs, a revocable living trust allows you to provide for their care without disqualifying them from receiving government benefits.

Simple Will vs. Living Trust

While a simple will is easier and less expensive to set up than a revocable living trust, it lacks many of the benefits that a trust provides. Wills must go through probate, they offer no privacy once entered into court records, and they provide no protection in the event of incapacity.

When to Choose a Revocable Living Trust

1. You Value Privacy

If you prefer your financial matters remain private after your death, a revocable living trust is a superior choice.

2. You Own Property in Multiple States

If you own property in multiple states, a revocable living trust can avoid multiple probate proceedings, as the property in the trust would not go through probate in each state.

3. You Want to Plan for Incapacity

If planning for potential incapacity is important, a trust provides a straightforward method for someone to manage your affairs without court involvement.

4. You Have a Complicated Family Situation

For those with complex family situations, such as children from multiple marriages, a trust can offer more nuanced control over asset distribution.

Implementing a Revocable Living Trust

Setting up a revocable living trust involves several steps:

1. Drafting the Trust Document: This outlines how the trust operates and includes your wishes for asset distribution.
2. Funding the Trust: This involves transferring assets into the trust’s name.
3. Appointing a Trustee: You must choose someone to manage the trust after your passing.

Selecting a Successor Trustee

When setting up a revocable living trust, one of the critical decisions you’ll make is selecting a successor trustee. This person will manage the trust upon your incapacity or death. Understanding the role and responsibilities of a successor trustee is vital for ensuring your trust operates as intended.

The Role of the Grantor and Trustee

In a revocable living trust, you, as the grantor (the person who creates the trust), typically also serve as the initial trustee. This dual role allows you to maintain control over the trust assets during your lifetime. You have the authority to manage, invest, and spend the trust assets as you see fit, reflecting the trust’s revocable and flexible nature.

Transitioning to a Successor Trustee

Upon your incapacity or death, the role of managing the trust shifts to the successor trustee. This individual or entity then becomes responsible for administering the trust according to your established guidelines.

Considerations in Selecting a Successor Trustee

1. Trustworthiness and Reliability

The successor trustee should be someone you trust implicitly. They need to be reliable, able to manage financial matters responsibly, and committed to following your instructions outlined in the trust.

2. Financial Acumen

While not required to be a financial expert, the successor trustee should have a reasonable understanding of financial matters or the willingness to seek professional advice when necessary.

3. Impartiality

Choose someone who can act impartially, especially if your trust beneficiaries have conflicting interests. This is crucial to prevent disputes and ensure fair and unbiased management of your trust.

4. Availability and Willingness to Serve

Ensure that the person you are considering is willing and able to take on this responsibility. Being a trustee can be time-consuming and occasionally challenging.

5. Knowledge of Your Family Dynamics

A successor trustee who understands your family’s dynamics and relationships can be more effective, especially when sensitive decisions are required.

6. Longevity Considerations

It’s wise to select someone who is likely to be available and capable for many years. You might also consider naming a secondary successor trustee if the first choice is unable to serve.

Alternative Options

• Professional Trustee: You might consider appointing a professional trustee, such as a trust company or a bank’s trust department, especially if your estate is large or complex.
• Co-Trustees: Appointing co-trustees, where two or more individuals or entities share the responsibility, can provide a balance of skills and reduce the burden on any one person.

Your Role in Preparing the Successor Trustee

As the grantor and initial trustee, part of your responsibility is to ensure that your successor trustee understands their role and your expectations. Provide them with all necessary documentation and guidance on managing the trust. Regular discussions and updates about your trust and its assets can also prepare them for their future responsibilities.

Take Action Today!

As you can see from this post, you have options when you plan your estate, and the revocable living trust is not the only type of trust. When you engage our firm, we will make sure that you understand the possibilities so you can make informed decisions.

You can get started right now by calling our Metairie, LA estate planning office at 504-831-2348, and you can use our contact form if you would rather send us a message.