A Revocable Living Trust vs. a Will: What's the Difference?

It's More Than Just Distributing Your Property After Death

Table of Contents
Table of Contents
Image shows an elderly, heterosexual couple signing a document. Text reads: "Revocable living trust benefits: avoid the court-supervised probate process; maintain your privacy; prepare for mental disability"

Image by Julie Bang © The Balance 2019

Living trusts can be either revocable and irrevocable. A revocable trust can be undone or altered by its creator—referred to as the grantor or the trustmaker—at any time. It's a legal vessel into which you can transfer your property for estate-planning purposes.

A revocable trust has some distinct advantages over a ​last will and testament, but making a decision between these two estate-planning tools comes down to your personal concerns and what you want to achieve with your assets.

What's the Difference Between a Living Trust and a Will?

Revocable Living Trust Last Will and Testament 
Avoids the necessity of probate Must be probated to pass assets into the ownership of beneficiaries
Formation documents are not a matter of public record Must be filed with the court to open probate, allowing anyone to read its terms
Can appoint a successor to take over management of the assets if the trustmaker becomes mentally incapacitated Doesn't take effect until the death of the grantor

The Probate Requirement

Probate is the court-supervised process of transferring assets from the deceased's ownership into the names of their beneficiaries. It's required when someone dies leaving a will, or if they don't leave a will or have any other estate plan. Probate is necessary because the property has no other way of passing to a living individual, and the deceased can't continue to own property.

A revocable living trust doesn't require probate because the trust becomes the official owner of the assets when they're transferred into it. The trust hasn't died, so a court process isn't necessary to transfer their ownership. A trust a private contract between you as the trustmaker or grantor and the trust entity. A grantor often serves as the trustee of their own revocable living trust, managing the property placed within it during their lifetime.

A successor trustee can be named in the trust's formation documents to step in and take over management of the trust after the grantor dies. The successor would settle the trust and distribute its property to the beneficiaries named in the trust documents. 

Living Trusts Maintain Privacy

A will becomes a matter of public record when it's submitted to the court to open the probate process. Anyone can stop by the courthouse and read it. They'll know what you owned and to whom you left it. 

No one other than the beneficiaries—and, in some states, your heirs regardless of whether you've named them as beneficiaries of the trust—are entitled to see or review your trust documents. But the documents won't become a matter of public record unless an heir or a beneficiary files a lawsuit to challenge the validity of your trust. The trust documents would become evidence in this type of situation.

Planning for Mental Disability

A significant advantage of a revocable living trust is that it can prepare your estate for the eventuality that you might become mentally incapacitated at some point before your death. Unlike a last will and testament, a trust doesn't just govern your assets when you die.

Your successor trustee can also step in if you become mentally incompetent to the point where you can no longer handle your own affairs. Your trust documents can specify how it should be determined that you're mentally incompetent, such as by certification from your own physician or by a team of physicians who must all concur.

Your property would not transfer to your beneficiaries if you should become incapacitated, as it would at your death. Your successor trustee would simply manage your finances and property for you because you're unable to do so.

Your loved ones would have to ask the court to appoint a guardian or conservator to manage your affairs in this case if you leave a will rather than a revocable living trust.

Another Option

An irrevocable trust isn't an option for most people because it involves turning over ownership of your property to the trust and its trustee forever. There's no turning back.

The primary advantage in forming an irrevocable trust is that the value of the assets it holds won't count against your estate for estate tax purposes. This can be beneficial for those with extremely valuable estates. You're always free to reverse your decision later if you form a revocable living trust rather than an irrevocable one.

The Bottom Line

A trust is just an empty vessel when it's first formed. It's simply legal entity without ownership of anything until you transfer your property into it.

Property that's left out will still require probate if you've made no other arrangements for it to pass to living beneficiaries, such as by designating beneficiaries for certain assets like retirement accounts. Some people create "pour-over" wills in addition to their revocable trusts to deal with any property that's inadvertently left out of the trust.

This type of will would affectively catch property that you haven't yet gotten around to transferring into your trust. It simply directs that anything you still own in your own name should go to the trust at the time of your death. A pour-over will still requires probate. 

A pour-over will still requires probate.

You must also use a will to name a guardian for your minor children in the event of your death in most states. A trust can't provide for this, but you can create a will simply for this purpose and place your assets into the care and ownership of a trust.