Living Trust vs. Will

This post compares Living Trusts vs. Wills. The post was authored for us by Ms. Eman Patricia Katbi. She is a licensed attorney and a licensed Certified Public Accountant focusing on tax matters including estate planning, advising on business transactions, and negotiating tax obligations with federal and state taxing entities. For comments or questions please write to us or Ms. Katbi at eman.arabikatbi@gmail.com.

Revocable living trusts are gaining popularity as medium in estate planning. However, many clients ask if they need a Will or a living trust. The answer is almost always: you should always have a Will, and a trust is recommended, depending on each person’s circumstances.
Most people know what a Will is: a document that, upon the decedent’s death, will be filed with the probate court to administer the estate.
A trust, on the other hand, is a document creating a separate entity (easiest to think of it as a separate company). This entity was designed to allow for the smooth transition of assets between generations and assist in estate planning. Assets held by the living trust will pass to the designated trust beneficiaries without court involvement. For a trust to work, assets have to be transferred into the trust after it is set up. This would include, if transferring real estate into a trust, deeding the real estate to the trust.
There are at least four main advantages to having a revocable living trust in addition to a will:

1. Assets can pass to beneficiaries without court intervention. The probate courts in Texas, while quicker and less expensive than in some other states, still takes time and money to go through. This is especially helpful if a person owns real estate in more than one state. A trust holding the real property in another state can avoid the necessity of two probate proceedings, one in each state.
2. A living trust can also provide an advantage if a person become incapacitated. If the assets are held in a living trust, the assets can continue to be managed for the beneficiary’s benefit by a successor trustee without the necessity of a court-supervised guardianship proceeding. A court-supervised guardianship proceeding can be very time-consuming and expensive.
3. A living trust distributes all assets in the trust as specified in the trust agreement. A Will, on the other hand, only controls the disposition of assets that are a part of the probate proceeding. Various types of assets automatically pass to specific beneficiaries regardless of what the owner’s Will may state. This problem can be minimized where the asserts are held by the trust or the trust is named as the designated beneficiary.
4. A living trust can preserve a decedent’s privacy. If a Will is probated, the inventory of the decedent’s estate becomes a matter of public record. On the other hand, a living trust is privately managed and not subject to scrutiny by the public.

A person should always have a Will in order to expedite probate proceedings for their loved ones. If a person dies intestate, that is, without a Will, his or her loved ones will have a significantly more difficult time probating the estate than if the decedent had had a Will that conforms with Texas law. A revocable living trust can be created without a Will, but the best solution, should one be interested in a revocable living trust, is to have both a Will and a trust. This can significantly assist a decedent’s loved ones during very trying time.