AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

Advantages vs. Disadvantages of a Revocable Trust

New Grandchild

Advantages of a Revocable Living Trust

  • Avoidance of probate. In particular, a revocable living trust can avoid expensive multiple probate proceedings when you own real estate in several different states, as well as the publication of the otherwise private financial details of your estate.
  • Avoidance of conservatorship. A revocable trust can avoid the additional cost of a conservatorship in the event of your incapacity.
  • Efficient distribution. A revocable trust can reduce delays in t istributing your property after you die, although delays caused by filing an estate tax return cannot be avoided.
  • Confidentiality. Generally the terms of your living trust are confidential, with only your named beneficiaries and trustee having access to that information.
  • Continuity. A trust can provide continuity of management of your property after your death or incapacity.

Disadvantages of a Revocable Living Trust

  • Expenses of planning. A revocable living trust can be a little more complicated than a will to draft, and asset transfers can take time and can result in additional costs.
  • Expenses of administration. If you appoint a bank or trust company as trustee, you will have fees to pay (though these may take the place of investment advisory fees and other fees you are already paying).  Of course if you do not use these services, this additional expense will not apply.  Setting up a revocable living trust will not eliminate the need for professional services of attorneys and accountants in the future.
  • Inconvenience. Once the trust is established, you must be sure that trust books are maintained and that all assets continue to be registered to the trustee.   Again, this is not a large issue but certainly is something to consider.
  • Unforeseen problems. Revocable living trusts can raise a variety of new problems regarding the ability to borrow against property, title insurance coverage, real estate in other countries, Subchapter-S stock, certain pension distributions, and many other issues. Only a skilled attorney familiar with estate planning can tell you whether, on the whole, a revocable living trust is right for you, your family and your assets.

In this author’s opinion, the advantages far out weight the disadvantages

This is based on an posting by the Oregon State Bar

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