Is a revocable trust, also known as a living trust, preferable to a will? Well we need to look at why you’re setting up a trust. Most people who are setting up trusts are setting up for the purpose of avoiding probate. So in order to answer the question, first we need to see how your assets are titled. If you have a husband and wife with a longstanding marriage and you own all your assets in your joint names, as husband and wife, well you do not need a trust and do not suggest you spend the money for it and a Will will do just fine because the assets will pass to the surviving spouse and therefore avoid probate which is the purpose of setting up the trust. I then suggest you also have a will to cover any assets that might not be titled in the joint names.
Now, if you are a single person, we then look at the purpose of setting up the trust and if it’s to avoid probate, probate can be avoided by re-titling your assets such as if you have two children and you have a bank account and you wish the children receive the bank account, you have the account set up in your name payable on death, or called a POD account, to your two children so that when you pass away, the account will go automatically to your two children and avoid probate. You also can even take care of your real estate such as your home by signing a life estate deed which allows you to retain control of your home and live there during your lifetime but provides that upon your death that it automatically vest in your two children.
Now, if you have a particular problem with one of your children, if you do not want them to receive your assets outright such as one that has say a drug addiction or if you have one that has financial problems or federal tax liens or any other basis that they cannot handle money and you want them to receive it over a period of time, then we may want to set up a trust to accomplish that. Same thing if you have minor children. If you say, “Well, I don’t want them to receive these assets because they’re under age,” or “I don’t want them to receive it at age 18,” those are all good reasons to set up a trust. And if you are husband and wife, we can put in your will as a safeguard, a testamentary trust that says if your spouse predeceases you and you don’t get around to addressing it after your spouse dies, then you can set up a trust.
So that’s the long answer. The short answer to this is, why are you setting up a trust? And so once you define that question, well then we could answer that as to whether or not it’s preferable to a will or not and trusts are more complicated and cost more to prepare. And most of the time we can re-title your assets to avoid probate and don’t suggest that you set up a revocable trust, a joint trust in any event. So hopefully that gives you a lawyer answer to whether or not a trust is preferable to a will. If you have some questions about it, give me a call at 727-847-2288.