What is the difference of doing your planning with a will or a living trust? A will is generally a simpler document to draft and therefore you save some up-front costs in creating the document. However, since probate is required of a will, you have costs that are going to be incurred when you die. You also don’t need to do funding transfers like what we do with a trust. So, the basics are that a will tends to be cheaper to draft and involves less work on the client’s part at this point
On the other hand, a revocable living trust costs a bit more to draft in most circumstances and involves more costs to transfer assets, including deeds we can prepare an file. But don’t forget the burden to you to transfer bank, financial, and other accounts. Why must we do these transfers? A trust only controls the assets that are titled in the name of the trust. So, for example, if you have a homestead, merely signing a trust does not mean that the homestead is controlled by the trust. The homestead must be deeded to the trust. Not only real estate, all assets must be transferred to the trust, a process we call funding. Once fully funded, however, a person with a revocable living trust will not go through probate. So, on incapacity of the trustmaker, we just change who runs the trust. On death, we just change who gets to use the trust. So a revocable living trust can be much easier for the transition process of incapacity and death.
The fundamental issues for most people that lead us to recommend a revocable living trust is whether it would be complex to transfer their assets upon death or they need special protection to avoid a guardianship dispute.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
