Both a will and a revocable living trust provide a set of instructions for how to distribute assets after you pass away. These documents have some key similarities and differences that are worth considering before you decide which document to use.
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Key Differences
Both documents enable the creator to leave assets directly to a beneficiary, or establish a trust in that person's name. However, the key difference between the two is what they do not do.
For example, a will doesn't offer protections during your lifetime if you become incapacitated. Also, as mentioned in a previous article, a will is a public document and doesn't provide any privacy when it comes to the assets you're leaving to each beneficiary. A will is also subject to multiple probates if you own property in more than one state.
If you'd like to avoid these issues, a revocable living trust might be a better option. However, a revocable living trust doesn't have the oversight protections provided by the probate process. You also might not have as much protection from creditor claims against your estate, potentially leaving your loved ones in a difficult situation. Lastly, a revocable living trust doesn't allow you to name a guardian for any children, whereas a will does.
Oftentimes, a document called a “pour over will” can be drafted along with a revocable living trust. This document allows you to appoint a guardian for minors and provides the disposition of any assets that weren't transferred into the name of the trust.
All told, the decision to use a will or a trust is largely dependent on your life circumstances and where you live. As an example, Washington State has a nominal flat-rate probate fee and a relatively straightforward probate process, so using a trust solely to avoid the cost of probate may not be the best choice. However, other states may charge a significant probate fee or have a lengthier process, so the use of a trust may be more beneficial.
Either way, you should definitely consult with an attorney if you want to know which document type would be a better fit for you.
Other questions? Reach out to one of our professionals at BECU Trust Services. We can answer any questions about the process and refer you to an attorney to get started. Contact BECU Trust Services at 206-812-5176, or becutrust@becu.org.
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