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Compared to a last will and testament, this form of trust has several distinct advantages. This article discusses the benefits of a trust vs. a will, including: Getting Around Probate, Keeping Your Personal Information; and Making Provisions for Mental Illness
The choice between a revocable trust and a will is based on your personal feelings and the goals you intend to accomplish in your estate plan.
Revocable and irrevocable trusts are the two main forms of trusts. Special needs trusts and spendthrift trusts are two examples, but trusts can be configured to do almost whatever you want, and they all fall into one of these two groups.
For most people, an irrevocable trust isn’t a viable choice because it entails permanently transferring control of your property to the trust and its trustee—no there’s going back.
If you change your mind, a revocable living trust may be “undone.” If you form a revocable living trust instead of writing a will, you can always change your mind later if you’d like to do so.
Compared to a last will and testament, this form of trust has several distinct advantages. This article discusses the benefits of a trust vs. a will, including:
- Getting Around Probate
- Keeping Your Personal Information; and
- Making Provisions for Mental Illness
Getting Around Probate
The court-supervised method of shifting properties from a decedent’s possession to his heirs is known as probate. Since the property has no other means of transferring to a living person, it is expected when someone dies leaving a will—or even if they don’t leave a will.
Since the trust retains the properties and the trust hasn’t died, a revocable living trust does not require probate. It’s a private arrangement between you and the trust party as the “trustmaker” or “grantor.” In most instances, the grantor acts as the trustee of his own revocable living trust during his lifetime, controlling the property placed within it.
When the grantor dies, a successor trustee will be designated to take over control of the trust, settling it and distributing its assets to the beneficiaries named in the trust documents. Learn more about how a revocable living trust can avoid estate taxes in our article.
Keeping Your Personal Information Private
When a will is sent to the court to open probate, it becomes public record. Anyone can read it if they come to the courthouse. They’ll be able to tell what you owned and who you left it to.
Only the beneficiaries—and, in some states, the heirs, whether or not they are beneficiaries of the trust—have access to the trust records. They won’t become public record until a beneficiary or successor files a lawsuit challenging the trust’s validity.
Making Provisions for Mental Illness
A revocable living trust has a huge benefit over a will in that you will prepare your estate if you become mentally incapacitated, not only when you die.
If you become mentally unstable to the extent that you can no longer manage your affairs, your successor trustee can step in.
Your trust documents may indicate how you will be determined to be mentally incompetent, such as by your own physician’s certification or by a team of physicians who must agree.
When this occurs, your property would not be transferred to your heirs as it would be if you died. If you are unable to handle your assets and property, your successor trustee will do so for you.
This is something that a will cannot provide for. If you don’t have a revocable living trust, your loved ones will have to petition the court to name a guardian or conservator to handle your affairs.
You may also need a will.
When a trust is formed, it is an empty vessel, a legal entity with no property ownership until you pass your property into it. If you’ve made no other plans for it to transfer to living beneficiaries, property that’s left out may still require probate.
To deal with excluded property, some people build “pour-over” wills. This form of will clearly directs that when you die, everything you own under your own name should be transferred to the trust. A pour-over also necessitates probate.
In most states, you may also use a will to appoint a guardian for your minor children if you die. This is something that a trust cannot do. Learn about how to revoke a trust in our article.
A Cautionary Note
Some revocable trusts don’t consider mental incapacity, while others have only basic preparation. If you decide to create a trust, make sure it has a detailed disability plan.
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