When should a client use a revocable trust instead of just a will?

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AcadiFi · Accepted Answer

Wills direct distribution of probate assets after death through court-supervised probate. Revocable living trusts hold assets during life and distribute them privately after death without probate. The choice depends on five factors:

(1) Probate avoidance: probate takes 6-18 months, costs 3-7% of the probate estate in many states, and creates public records. For Rosalind with $2.1M in home, brokerage, and personal property in California (high-cost probate state), a trust saves roughly $65-90k in probate fees and six months of delay.

(2) Multi-state property: each state where real estate is owned requires separate ancillary probate. Trusts consolidate everything into one administration.

(3) Incapacity management: a revocable trust can continue operating with a successor trustee during incapacity without court-appointed conservatorship. A will does nothing during life.

(4) Privacy: probate records are public; anyone can see the decedent's assets and beneficiaries. Trust administration remains private except in litigation.

(5) Blended family or special needs: trusts allow complex multi-generational or conditional distributions. Stepchildren, special-needs beneficiaries, and spendthrift heirs benefit from trust structure. A simple will-based distribution passes assets outright, which may be inappropriate.

Costs: attorney fees for a revocable trust package ($2,500-$5,500) exceed simple wills ($500-$1,200). Funding the trust (retitling accounts) takes effort. Ongoing administration during life is minimal because the grantor usually serves as trustee.

Trusts do not avoid estate tax (revocable trusts are fully includible) or income tax during grantor's life. They do not override beneficiary designations - retirement accounts and life insurance still pass by form.

For clients with simple estates under state probate thresholds ($100-200k) and no real estate, a will plus beneficiary designations plus durable POA may suffice. CFA Level III candidates should evaluate both tools within the broader estate plan including irrevocable trusts, GRATs, and gifting strategies.

When should a client use a revocable trust instead of just a will?

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