Whether you are better off with a will or a revocable living trust depends primarily on how important it is to you to avoid probate. Assets owned by a living trust avoid the probate process, while property bequeathed in a will must go through it. There are no tax savings in one vehicle over the other, but living trusts offer more privacy because probate assets become part of public record.
Revocable Living Trusts
Revocable living trusts are legal instruments where you transfer your assets to the trust's ownership. As the grantor, you name the trustee to manage assets and the beneficiaries receiving income. During your lifetime, you can name yourself as trustee and beneficiary, managing the assets and receiving income in much the same manner as when they were under your legal ownership. You can add, buy or sell assets, or even terminate the trust. You can also name another person or fiduciary institution as trustee or as beneficiaries. In the trust, you provide for a successor trustee after your death and name beneficiaries for your assets. After you die, the trust generally becomes irrevocable, and its terms cannot change. You still need a "pour-over" will to transfer any assets you own that are not in the trust at the time of your death into it.
Your last will and testament, signed, witnessed and notarized, connotes how you want your worldly goods distributed after your death. In it you name the executor, the person or institution charged with handling your estate. If you have minor children, a will is the only instrument where you can designate a guardian. Your will specifies how property titled in your name should pass to an heir or beneficiary. Jointly-titled assets, such as the marital home, passes to the survivor and does not go through probate. You can bequeath individual personal possessions or assets to recipients in the will.
Creating a Trust
You can set up a trust through an attorney or by purchasing "do-it-yourself" trust kits. If your assets are relatively complex, the latter is probably not a good idea as you could benefit from professional advice. Living trusts cost more to set up than wills. It's possible that the cost evens out through the lack of probate costs for the living trust.
Creating A Will
Contact your attorney to draft a will. You should also use the services of an estate planning specialist if your estate is complicated. Often, a simple will used primarily for asset distribution is all that is needed. You can also create a testamentary trust in your will, which begins after your death. Name a trustee for this type of trust to oversee assets for designated heirs or beneficiaries. Testamentary trusts might be used to provide for those who cannot handle money matters on their own. If your financial or family situation changes, rewrite your will. Your last will and testament is the one that goes through probate court.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.