The Advantages of a Revocable Living Trust Compared to a Will
A Living Trust is a private contract between a Grantor and a Trustee in which the Trustee is given the authority to manage the assets of the Trust.
The assets, which are owned by the Grantor, must be transferred into the Trust for the Trustee to manage them. When the Grantor is declared mentally incompetent, the Trustee is given managerial control over the assets. In the case of the Grantor’s death, the Trustee divides the assets amongst beneficiaries under the Trust.
A Living Trust is similar to a Will in the sense that it divides assets of the deceased; however, there are several advantages to a Living Trust:
Increased Privacy by Avoiding Probate – Since a Living Trust is a private contract, the contents of the document remain private. Wills are required to be interpreted by a probate judge and become part of public record.
As long as the Living Trust is never contested in court, the public cannot find out what assets were left with whom.
Mental Disability / Incompetence – In the event that the Grantor becomes mentally disabled or incompetent, a Living Trust allows the Trustee to manage the Trust’s assets.
A Will comes into effect strictly after the Grantor is deceased. A Living Trust makes sure that your Trustee can access your funds to pay for your hospital treatment in the event of incompetence.
Lower Cost – A Living Trust does not need to be filed in probate court. Therefore, as long as it is not contested, it is typically cheaper to draft a Living Trust than a Will.
Revocable – A Revocable Living Trust allows the Grantor to change his mind and void the document at any time. The Grantor may wish to change Trustees or add assets acquired after the formation of the document.
Provide Protection from Creditors – A Living Trust typically provides a level of protection from the creditors of the beneficiaries. If, for example, your son is a beneficiary and is in debt, then his creditors are usually not able to come after the Trust’s assets.
Administer Assets for Minor Beneficiaries – When a judge determines the beneficiaries of a Will, distributions to a minor under the age of 18 are given to an adult to manage until the minor turns 18. This is because the law prohibits minors from owning property. On the other hand, a Living Trust enables the assignment of assets to a child.