Your will is one way to plan for the distribution of your assets on your death. But it’s only one tool in your estate-planning kit, and many people establish a revocable living trust as well as a will.
A revocable living trust establishes a legal entity with the power to hold title to assets. The trust agreement lists the assets held in the trust, the individual with the power to manage and distribute those assets (the trustee), and the individuals entitled to benefit from those assets (the beneficiaries).
It allows you the flexibility of making changes during your life as circumstances change. And, depending on state law, you may be able to act as trustee and receive income from the trust as a beneficiary during your life.
The advantage of a revocable living trust is that whereas a will must go through the probate process, a revocable living trust typically avoids this and the pitfalls usually associated with it.
Because the trust is unlikely to be subject to the probate process, distributions in accordance with the terms of the trust will not be delayed and can occur as soon as practicable after your death.
As well, relatives unhappy with the situation will find it difficult to challenge the provisions of the trust and will be forced to bring litigation against the trustee.
And, since it will pass outside the probate process, the trust agreement is more likely to remain confidential and will not be subject to public scrutiny.
A revocable living trust is not for everyone, however. Establishing one requires the services of an estate planning professional. There can be federal and state tax implications, depending on how the trust is structured.
As a result, individuals considering using a revocable living trust as part of their estate plan should consult their advisor and an attorney specializing in estate planning for advice and assistance.