Do I Need a Will or a Revocable Living Trust?

A common estate-planning question is whether a person needs a will, a revocable living trust, or both. These documents do different jobs, and many well-designed plans use both. WHAT A WILL DOES. A last will and testament states who should receive probate property after death and names the person who will administer the estate. Parents can also use a will to nominate a guardian for minor children. A will generally controls only property in the probate estate. It does not override a valid beneficiary designation on life insurance, a retirement account, or a payable-on-death account, and it does not control property owned jointly with survivorship rights. A will does not avoid probate; it tells the probate court how the estate should be administered. WHAT A REVOCABLE LIVING TRUST DOES. A revocable living trust holds and manages property for its beneficiaries. In a typical plan, the creator serves as the initial trustee and beneficiary, keeps control of the property, and may amend or revoke the trust while living and competent. A successor trustee can step in if the creator becomes incapacitated or dies. After death, the successor trustee can distribute property outright or continue holding it for children or other beneficiaries under the instructions in the trust. FUNDING MATTERS. Signing a trust is only part of the process. Appropriate assets must be transferred to the trust or arranged to pass to it at death. Real estate may require a new deed, and a non-retirement investment account may need to be retitled. An unfunded trust may own nothing, leaving assets subject to probate. WHY A TRUST PLAN STILL NEEDS A WILL. A person with a revocable trust should ordinarily also sign a pour-over will. It directs probate assets to the trust and acts as a backup for property never transferred to the trust. It does not avoid probate for an omitted asset. A will also remains the usual document for nominating guardians for minor children. PRIVACY, COST, AND PRACTICALITY. Probate is a court process, and many filings are public. Trust administration is generally handled outside court and may offer greater privacy. A funded trust may also help when someone owns real estate in more than one state. But a trust costs more to establish and requires continuing attention to ownership and beneficiary designations. A straightforward will plan may be appropriate for a person with simple circumstances and effective non-probate designations. ILLINOIS, MINNESOTA, AND WISCONSIN. Each state has its own execution and administration rules. A conventional attested will in Illinois generally requires the testator's signature and at least two credible witnesses. Minnesota and Wisconsin also generally require a written will signed with at least two witnesses. The details concerning witnesses, self-proving affidavits, electronic documents, marital rights, probate, and trust administration remain state-specific. A move between Illinois, Minnesota, and Wisconsin is a good reason to have an existing plan reviewed. WHEN A TRUST MAY HELP. A revocable trust may be worth considering when probate avoidance, privacy, incapacity planning, out-of-state real estate, staged distributions, or complex family circumstances are important. THE BOTTOM LINE. The choice is rarely simply will versus trust. A will provides guardian nominations and a backup method for omitted assets. A properly funded revocable trust can add privacy, incapacity planning, administrative efficiency, and longer-term control. The best plan coordinates the will, trust, powers of attorney, asset ownership, and beneficiary designations. This article provides general educational information and is not legal advice. Consult a qualified attorney about your specific circumstances.