There are numerous benefits to executing a revocable living trust as opposed to a last will and testament.
Once property is transferred into a revocable living trust it does not go through probate. After your death, the successor trustee, i.e., the person you appointed to become the trustee after your death, transfers ownership to the beneficiaries you named in the trust. This process can be as quick as a few weeks. There is no need for the successor trustee to retain lawyers nor are there any court fees to pay. To summarize:
a) A revocable living trust is not subject to probate
b) Property in different states does not require a second probate proceeding, or any probate proceeding if the property is titled and transferred to the revocable living trust, via the trustee of the trust.
c) No automatic court supervision.
Unlike a last will and testament, a revocable living trust is a private document and is not published. Please note: a Pour-over Will is used in conjunction with a living trust. A Pour-over Will is a simple Will that "pours" anything that you have not placed into the revocable living trust prior to your death into it after taxes and expenses are paid. NUPP Legal's Living Trust Estate Toolbox includes a Pour-over Will to use with your revocable living trust.
Tax Savings or Reductions and Costs
For married couples executing a shared revocable living trust, the estate tax liability which would otherwise be due at the death of the survivor can be greatly reduced or completely eliminated by proper planning.
Initially, a revocable living trust is usually more expensive than a will due to the length of the document and the necessity of transferring property into the revocable living trust which is referred to as "funding the trust". The transfer of real estate would include preparation and execution of real property deeds, etc.
The benefits of the additional cost are apparent when you consider events after your death: no need for duplicate probate when there is real property in different states, estate tax savings, the expedited transfer of the revocable living trust property per your wishes (since wills are frequently contested and are subject to a long estate / probate process while the successor trustee of a revocable living trust can immediately start transferring property per your revocable living trust directions.
There are no management fees or loss of control with a revocable living trust. A revocable living trust is a "living" document, meaning it takes effect immediately. After executing your revocable living trust and placing assets in it you continue to enjoy all the present benefits of your assets without any changes in your ability to control them.
A revocable living trust does not complicate your life or management of your assets. You can do whatever you can do now with your assets while protecting your property within the revocable living trust.
Guardianship and Management for Beneficiaries under 18
With a trust, when minors are the beneficiaries the trustee can manage and invest the trust funds, free of the costs and restrictions that arise when a court must appoint and supervise a guardian of the property until the beneficiary comes of age.
With a revocable living trust, management of a beneficiary's assets can continue to whatever age you specify. With a will, the court will set up guardianships for beneficiaries under 18 years of age, resulting in additional costs and restrictions that may be imposed by the court. In addition, guardianships terminate when the beneficiary reaches 18 years of age. Obviously all children do not mature at the same rate and with your revocable living trust you can choose the guardian and stipulate how long the assets should be managed. For example, you can easily dictate that at age 18 the beneficiary be given 1/4 of the assets, another 1/4 at age 22 and the remaining 1/2 at age 25 if you wish.
NUPP Legal's revocable living trust forms include guardianship clauses for minor beneficiaries so you can easily set up distribution for minors in any way you wish.
Protection of Trust Assets
With a revocable living trust you can protect trust assets from judgments, creditor claims and lawsuits filed against you or your beneficiaries after your death. Please note that for an individual (married couples have an advantage in this area) a revocable living trust does not protect assets from creditors during your lifetime, especially the IRS. With respect to the IRS, a revocable living trust is considered transparent during your lifetime and assets in it can be attached the same as your personal property.
With a last will and testament, the court freezes all assets during the probate proceeding. During this time, creditors may make claims against the estate and heirs can contest or challenge bequests you made to beneficiaries if for no other reason than they are disgruntled or disappointed with their bequest or lack thereof.
For married couples there may be additional benefits, including:
a) Defer claims of the 1st spouse to die until at least the surviving spouse passes away (or possibly longer);
b) The surviving spouse can exclude the deceased spouse's share of the estate when applying for government health care benefits;
c) Lawsuit protection: when assets are held between two properly drafted revocable living trusts, the assets of one spouse can be insulated from the acts of the other spouse. This is why NUPP Legal's shared revocable living trust creates two (2) trusts in the declaration of trust, one for each spouse or partner. Together, the two revocable living trusts are separate entities while both spouses can jointly manage shared property while each spouse keeps control over their declared separate property.
Avoid Probate in Multiple States
If you have property in multiple state, a last will and testament will require probate in each of those states. This is commonly referred to as "ancillary probate". However, by placing your property into your revocable living trust you can avoid probate and the revocable living trust assets can pass immediately to your beneficiaries.