My Neighbor Says I need a Revocable Trust. Do I?

Are you taking legal advice from your neighbor?

For example, Sally, your neighbor of 10 years, may be a novice legal eagle who thinks she knows the difference between a will and revocable living trust and tells you which document you need. Unless Sally has a law degree and is licensed to practice law, you may want to avoid taking her advice. Why? Because you may get the wrong estate plan, which may cost you money and time in the long run.

Read on to learn the difference between a will and revocable living trust. And stop taking legal advice from your neighbor!

Revocable Trust vs. Will: What’s the Difference?

You may ask, “What’s a living trust vs. a will? Which estate plan is right for me?” Here are the differences between a Revocable Living Trust and a Will.

Revocable Living Trust

The purpose of a revocable living trust is to place your assets into a trust for your benefit while you’re still alive.

You or someone you trust manages your property. You can buy, sell, or bequeath property. The only difference is that it’s in the trust’s name rather than your own. Keep in mind that upon your death, assets are transferred to your designated beneficiaries.

The advantages of a revocable living trust vs. a will are:

• Avoid probate.
• Keep your privacy after death.
• Leave property to young children.
• Protection from court challenges.
• Avoid a conservatorship (guardian or protector appointed by a judge.)

To set up a revocable living trust, your attorney needs to execute a legal document stating that you’re creating the trust to hold property for the benefit of you and your family, or whomever you name as beneficiaries.

You need to transfer property to the trustee under the trust agreement.  You may also attach a schedule that lists everything that is to be placed in the trust.

The bottom line is that you may add or subtract property at any time (benefit of a revocable living trust). But keep in mind a change in ownership is needed. This means you will no longer sign your name as Jane Smith. Instead, you would sign as Jane Smith, Trustee.

Whether or not a revocable trust is right for you depends on factors such as the size of your estate, assets, and the plans you have for you and your family. This is why it’s important to speak with an attorney who can walk you through the revocable living trust process.

Will 

Most people require a will, sometimes referred to as a “last will and testament.” It’s a legal document that lists your final wishes such as:

• Name of the executor (Personal Representative)
• Guardians for your children.
• Provisions for pets.
• Beneficiaries of your estate.
• Allocation of funds to cover debts and taxes.

Unlike a revocable living trust, a will is less complicated to set up. All you do is:

• Decide who you want as Executor.
• Decide whom you want to receive your assets when you die (beneficiaries).
• Decide how much each beneficiary is to receive of your estate.

 Do I Need a Will or Living Trust?

You may not want to think about your death and getting your affairs in order, but it’s better to do it now while you’re of sound mind and body. Why? Because it will lessen the burden on your family as they deal with their grief surrounding your passing.

Instead of getting legal advice from your neighbor, contact an estate planning attorney who can advise you on the types of legal documents you need for an estate plan that is right for you. You may discover that you require both a will and revocable living trust.

Want more information about revocable trusts? Get this trust funding packet now!