Advantages of a Living Trust

There are several important advantages of a living trust.

However, whether any particular advantage would actually benefit you depends on your particular circumstances.

Listed below is a summary of each of the primary advantages that a living trust could offer you. Each paragraph has a link that will take you to a page that will describe the advantage in more detail and help you decide if that living trust advantage would benefit you.

Avoid Probate -- Probably the biggest potential advantage of a living trust is that it may be used to keep your estate out of probate. And keeping your assets out of probate will likely save your heirs time and money. However, this is only true for assets that are actually transferred to the trust during your life. The key question is whether the expense and trouble of transferring assets to a trust in your lifetime justifies the benefit to you and your heirs of avoiding probate.

Save Money -- Generally it will cost more up front to have a living trust prepared than a simple will. The savings are on the back end. The real savings that a living trust potentially offers only applies if the living trust is funded during your lifetime and thus its assets avoid probate. However, there may be costs to fund your living trust. The ultimate question is whether the living trust will save your estate money in the long run. And, if so, how much. To find out, you have to compare the costs of probate to the cost of a living trust. If you have substantial assets (approaching $1,000,000 in value) – there likely would be an overall cost savings to you and your estate if you obtain and fund a living trust in your life.

Asset Management Upon Incapacity -- A living trust offers all of us a nice option, to avoid a guardianship proceeding, in case we become incapacitated and unable to manage our assets. Even if the living trust isn't funded until after our death, having it available in case needed while we are still alive is a useful benefit. For more, see

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Privacy -- One of the often overlooked advantages of a living trust is that it offers some privacy advantages. Essentially, a living trust is a tool that can be used to make it more difficult for disgruntled heirs and creditors of you or your beneficiaries to challenge the distribution of your assets.

Flexibility -- One of the most important advantages of a living trust is that it is far more flexible than a normal testamentary trust. The reason is that a testamentary trust is created by a will. It is normally part of the will. So, if you want to change it, you have to re-write the will as well. And any time you execute a new will, you have to go through all the formalities required to make a will valid. A living trust, in contrast, is a separate document you are can amend at any time. There are very few formalities required to amend your living trust.

See How Estate Plan Works While Still Alive --

Another of the underestimated advantages of a living trust is that it gives you the opportunity to begin to implement your estate plan – BEFORE YOU DIE. You can move assets into your living trust and see your estate plan begin to work. You can see how your executor performs and get some idea if your distribution choices are the best. Maybe you will find that one of your intended beneficiaries needs more or less income than you thought. Maybe it turns out that your son is not the best person to give the family business to. Or, you might change your mind about who should be the trustee of the trust. A living trust offers you the chance to find some of those things out and make changes to your estate plan—before it's too late. Also, it's nice to know that your living trust is the same trust that will carry on your life's work – even after you are no longer around. This is a fundamental difference from a testamentary trust that does not come into being until after you die.

Disinherit Relative -- As you can imagine, this is a controversial and complex issue. Essentially, most states have "elective share" rules that give certain of your relatives "elective share" rights. Spouses normally have such rights, and sometimes, children may also. The issue usually comes up in blended family situations with step-children to consider, etc. Sometimes, different members of the extended family will not agree with your choices as to how your estate gets distributed after your death. In these situations, the likelihood of litigation over your estate is increased. The privacy of a living trust increases the likelihood that your desires will be accomplished.

This page can't be ended without commenting on something that is not on this page: Taxes. There is a common misconception that one of the advantages of a living trust is that it will save taxes. That is really a myth. It is true that a living trust can be used to save taxes. But, so can a testamentary trust. For more about that see Living Trust Myths.