Wills vs. Revocable Trusts (or Living Trusts): Understanding the Differences
When it comes to estate planning, choosing between a Will and a Revocable Trust (also known as a Living Trust) can significantly impact how your assets are managed and distributed at your death. Both options serve to ensure that your wishes are carried out, but they function in different ways and offer unique benefits. Understanding these differences can help you make an informed decision about which tool is best suited to your needs.
When it comes to estate planning, deciding between a Will and a Revocable Trust depends on your unique circumstances and goals. Both tools serve to ensure your wishes are carried out, but they offer different benefits and require different levels of management.
Key Differences Between a Will and a Revocable Trust:
Probate Process:
Will: Subject to probate. However, probate in Texas typically does not significantly add to the time an executor spends settling an estate. Time will still be needed to manage a loved one’s property, whether or not probate is involved. Probate usually involves a short hearing (less than 30 minutes) and the signing of documents prepared by the probate attorney. While probates do incur costs, these are generally paid out of the estate’s assets, not the executor’s. Once probate is completed, the executor has the authority of the court to act on behalf of the estate, making it easier to deal with family members and third parties, such as banks.
Revocable Trust: Can help avoid probate, allowing for a quicker and more private distribution of assets. However, having a revocable trust does not guarantee that probate will not be needed in the future. It depends on what property has been transferred into the trust during the creator’s lifetime. Living trusts can streamline the transfer of assets at death but require ongoing management during life.
Privacy:
Will: Becomes public record once it goes through probate, though accessing the will usually requires effort and knowledge that most people do not have.
Revocable Trust: Remains private, as it does not go through the probate process.
Control and Flexibility:
Will: Takes effect only after your death; changes require formal amendments.
Revocable Trust: Can be altered or revoked during your lifetime; provides ongoing management of your assets.
Incapacity Planning:
Will: Does not provide for the management of your assets if you become incapacitated, as it only takes effect at death. However, a Power of Attorney can be used to manage assets in such situations.
Revocable Trust: Includes provisions for managing your assets if you become unable to do so yourself.
Costs:
Will: Generally less expensive to create initially but may result in higher probate costs.
Revocable Trust: Higher initial costs but can save money by avoiding probate and reducing administrative fees.
There are many other nuances to the uses of Wills and Revocable Trusts for estate planning. If you have any questions or need assistance with your estate planning, please don't hesitate to call me. I'm here to help you make the best decisions for your future and your family's well-being.