The pros and cons of a revocable living trust

On Behalf of | Oct 21, 2021 | Estate Planning |

Most people recognize that they need a will, a financial POA and a health care directive and proxy. But many people are not sure whether or not a revocable trust is a good idea given their situation.

A revocable trust is created during the lifetime of the maker of the trust (the trustor). The trustor is commonly also the only or one of two or three trustees.

The benefits of a revocable trust

  • A revocable trust reduces your estate administration hassle and cost
  • There are few, if any, operating costs to a revocable trust
  • A revocable trust makes it possible for your estate to avoid the state probate process as well as ancillary probate (out-of-state) processes
  • The trust is available should the trustor become incapacitated
  • By law, a revocable trust is amendable and revocable
  • Cash in a revocable trust is readily available after the trustor’s death to pay bills
  • Designated beneficiaries can receive their share of the trust assets almost immediately after the trustor’s death
  • The assets in a trust are private, unlike the assets which are distributed in the probate process, which is public
  • A revocable trust means investments can be continuously and seamlessly managed
  • There is a more simplified transfer of property after death with a revocable trust

The benefits, in most cases, outweigh the drawbacks, as listed below.

The drawbacks of a revocable trust

  • It costs to have an attorney create a trust
  • Property must be registered in the name of the trust, this includes bank and brokerage accounts
  • A revocable trust must be updated should personal/marital/parental relationships change
  • The trust can be challenged by heirs
  • A revocable trust is not immune to creditors
  • A trust must still be administered and can engender fees
  • Assets in a trust are still considered for tax purposes
  • Some assets cannot be transferred to a revocable trust

For more detailed revocable trust information, visit our website page on trusts.

Trusts are not for everyone

Revocable trusts are a beneficial estate planning tool for many, many people. But there are not the right choice in certain situations and are not for everyone. Discussing whether or not this tool is a good fit given your situation is a conversation best had with your trusted estate planning attorney.