Posted by:  The Life and Legacy Planning Group

Confused about the differences between a Will and a Revocable Trust? If so, you are not alone. While it is always wise to contact experts like us, it is also important to understand the basics. Here is a quick and simple reference guide:

What a Revocable Trust Can Do – That a Will Cannot

  • Avoid conservatorship and guardianship. A Revocable Trust allows you to name your spouse, partner, child, or other trusted person to manage your money and property, that has been properly transferred to the Revocable Trust, should you become unable to manage your own affairs. A Will only becomes effective when you die, so a Will is useless in avoiding guardianship proceedings during your life.
  • Bypass probate. Accounts and property in a Revocable Trust do not go through probate before they can be distributed to their intended recipient. Accounts and property that pass using a Will guarantees The probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time-consuming – sometimes taking years to resolve.
  • Maintain privacy after death. A Will is a public document; a Revocable Trust is not. Anyone, including nosey neighbors, predators, and the unscrupulous can discover what you owned and who is receiving the items if you have a Will. A Revocable Trust allows you to maintain your loved ones’ privacy after death.
  • Protect you from court challenges. Although court challenges to Wills and Revocable Trusts occur, attacking a Trust is generally much harder than attacking a Will because trust provisions are not made public.

What a Will Can Do – That a Revocable Trust Cannot

  • Name guardians for minor child. A Will – not a Revocable Trust – can be used to name guardians to care for a minor child.
  • Specify an Executor. A Will allows you to name an Executor – someone who will take responsibility to wrap up your affairs after you die. This typically involves working with the probate court, gathering and protecting your accounts and property not owned by a Trust, paying your debts, and giving what remains to your named beneficiaries. But, if there are no accounts or property in your individual name (because you have a fully funded Revocable Trust), this feature is not necessarily useful. The Trustee of a Revocable Trust has many of the same duties and accomplishes many of the same objectives as an Executor, but operates outside of probate court.

What Both a Will & Trust Can Do:

  • Allow revisions to your document. Both a Will and Revocable Trust can be revised whenever your intentions or circumstances change so long as you have the mental ability to understand the changes you are making.

WARNING: There is such as a thing as an Irrevocable Trust, which cannot be changed without legal action. This is outside the scope of this discussion.

  • Name beneficiaries. Both a Will and Revocable Trust are vehicles which allow you to name who you want to receive your accounts and property.
  • A Will simply describes the accounts and property and states who gets what. Only accounts and property in your individual name will be controlled by a Will. Any account or piece of property that has a beneficiary, pay-on-death, or transfer-on-death designation is not subject to a Will; those designations trump whatever is listed in your Will.
  • While a Revocable Trust acts similarly, you must go one step further and “transfer” the property into the Revocable Trust – commonly referred to as “funding.” This is accomplished by changing the ownership of your accounts and property from your name individually to the name of the Revocable Trust. Only accounts and property in the name of your Revocable Trust will be controlled by the Trust’s instructions.
  • Provide asset protection. A Revocable Trust, and less commonly, a Will, is crafted to include protective sub-trusts to take effect after your death, which can allow your beneficiaries to receive some enjoyment and benefit from the accounts and property in the Revocable Trust but also keeps the accounts and property from being seized by your beneficiaries’ creditors such as divorcing spouses, car accident litigants, bankruptcy trustees, and business failures.

While some of the differences between a Will and Revocable Trust are subtle; others are not. Together, we will take a look at your goals as well as your financial and family situation to design an estate plan personalized to your needs. Call us today to schedule your in-person or virtual consultation and let’s get started.