Does a Trust Replace a Will?
Many are under the impression that a revocable living trust fulfills all the functions of a will. While a revocable living trust that is appropriately managed offers several benefits, it does not precisely replace a will. If you are trying to determine if this type of trust would be the most beneficial in your situation, try considering the primary purpose of a living revocable trust, the different benefits, and the tradeoffs required.
The revocable living trust is created during your lifetime, and as a “revocable” living trust, you can alter the trust at any time, in any way. One of the most beneficial aspects of the revocable living trust is that you retain control of assets in the trust, both management and distribution.
Does the Revocable Living Trust Help Avoid Probate?
Probate is the legal process of settling an estate. Many people attempt to avoid probate by establishing a revocable living trust. When assets are distributed from a trust, they do avoid probate. Still, the probate process isn’t nearly as problematic for the majority of estates as it was in years past due to the adoption of the Uniform Probate Code. The Uniform Probate Code simplifies the probate process for most small-medium sized estates.
Yet, even after the simplification of the probate process, assets in the estate are still a matter of public record, so it still poses privacy concerns.
If the estate includes properties from out of the decedent’s state of domicile, avoiding probate would be particularly advantageous because it could otherwise result in multiple probate proceedings.
Once a trust is created, it must be funded by transferring assets into the trust. Failing to fund the trust leaves assets subject to probate. It is not adequate to sign a trust document without retitling assets. Without funding the trust, the living trust is useless and offers no benefit.
But If You Have a Trust Do You Still Need a Will?
If you fund the living revocable trust, do you still need a will? The short answer to this question is yes. In most circumstances, the revocable living trust cannot adequately replace a will. It does not make sense to place some assets in a trust. For instance, it would be impractical in most cases to transfer cars, jewelry, furniture, and other tangible property to a trust. Therefore, some assets typically remain outside the trust, which means it’s still necessary to have a will to specify beneficiaries for the assets outside the trust. If there are minor children in your life, the will. It is also where you can designate a guardian. Other assets that require special considerations are also not retitled to a living trust (i.e., IRAs, 401(k)s, profit-sharing plans, etc.)
The revocable living trust is a complex legal document with many benefits, only a few of which are listed here. Get in touch with an experienced estate planning attorney to ask about other potential benefits like reducing estate taxes. Get in touch with the experienced Florida estate planning attorneys at Elder Solutions Law Firm today.