The benefits of a revocable living trust versus a will

Don Grady is a CPA and Professor of Accounting at National Louis University, Chicago.

A revocable living trust is a popular estate planning tool that you can use to determine who will get your property when you die. Most living trusts are “revocable” because you can change them as your circumstances or wishes change.

Revocable living trusts are “living” because you make them during your lifetime. Most people use a living trust to avoid probate.

Probate is the court-supervised process of wrapping up a person’s estate. Probate can be expensive, time consuming, and is often more of a burden than a help.

Property left through a living trust can pass to beneficiaries without probate in a relatively short period of time.

A revocable living trust document is a written document. The document must list the property in the trust, name a trustee, and name who gets the property when the trust maker dies.

The trustee is the person who will take care of the property. While the trust maker is alive, the trustee is usually the trust maker, and then a successor trustee takes over after the trust maker’s death.

After the trust document is made, the trust maker must transfer any property he or she wants covered by the trust into the trust.

For many items, this requires simply including a list of property with the trust document. However, titled property (like real estate) must be retitled in the name of the trust.

This is usually not complicated or difficult, but it must be done correctly or the titled property could end up in probate. You might ask, what are the differences between a Will and a Revocable Living Trust?

With both wills and revocable living trusts you can:
• Name beneficiaries for property
• Leave property to young children, and
• Revise your document as your circumstances or wishes change.
With a trust, not a will, you can:
• Avoid probate
• Reduce the chance of a court dispute over your estate
• Avoid a conservatorship, and
• Keep your document private after death.
With a will, not a trust, you can:
• Name guardians for children
• Name managers for children’s property
• Name an executor, and
• Instruct how debts or taxes should be paid.
If you are thinking about preparing a revocable living trust, my advice is to contact an estate lawyer to ensure that your trust document and transfer of assets are properly handled.

• Send your questions and ideas to: Sun Day, Frugal Forum Column, P.O. Box 761, Huntley, IL 60142, or, by email to:thefrugalforum@gmail.com

---

---