Why You May Need a Revocable Trust

6/4/2025 - By Mark Hemby, CFA, CFP®, Senior Financial Advisor

Estate planning ensures your assets are distributed according to your wishes after death. A will is a common tool for this, but many individuals should also consider adding a revocable trust to their estate plan. Understanding the purposes, benefits, and limitations of a revocable trust - alongside a will - can help determine if it’s right for you.

What is a Revocable Trust?

A revocable trust, also called a living trust, is a legal entity created during your lifetime to hold and manage assets. You, as the grantor, can modify or revoke the trust while you’re alive. It becomes irrevocable upon your death. Most people name themselves as trustee, maintaining control over the trust’s assets.

A will, conversely, is a document that outlines how your assets should be distributed after death and only takes effect then. While both have a purpose to serve in estate planning, they function differently, and their necessity depends on your circumstances.

Reasons to Consider a Revocable Trust

  1. Avoiding Probate: One of the primary reasons for having a revocable trust is to bypass probate. Probate is the court-supervised process of validating a will and distributing assets. Probate can be time-consuming, costly, and public. In contrast, assets in a revocable trust transfer directly to beneficiaries upon death, avoiding probate’s delays and costs. If you own property in multiple states, a trust can simplify matters, as probate would otherwise be required in each jurisdiction.
  2. Privacy: Unlike a will, which becomes a public record during probate, a revocable trust remains private. For individuals valuing confidentiality, this is a significant advantage.
  3. Incapacity Planning: A revocable trust provides seamless management if you become incapacitated. You can name a successor trustee to manage trust assets without court intervention, unlike a will, which only addresses post-death distribution. This ensures your financial affairs are handled smoothly during illness or disability.
  4. Flexibility and Control: As the grantor, you retain control over trust assets, serving as trustee and beneficiary during your lifetime. You can amend or dissolve the trust as circumstances change, offering flexibility similar to a will, but with added management benefits.

Why You Might Not Need a Revocable Trust

1. Simpler Estates: If your estate less than $14MM and the structure is simple, probate may be quick and inexpensive, especially in states with streamlined processes. Some states offer a “small estate” process that bypasses formal probate. A will alone may suffice for modest estates with no complex distribution plans.

2. Cost and Maintenance: Often creating a revocable trust involves greater upfront legal fees compared to a will. Trusts also require ongoing maintenance, such as transferring new assets into the trust (e.g., real estate or bank accounts). For individuals with limited resources or simple plans, these costs may outweigh the benefits.

3. Not a Complete Solution: Having a revocable trust doesn’t eliminate the need for a will. A “pour-over” will is often needed to catch assets not transferred to the trust, meaning you’ll still need both documents. Additionally, trusts don’t inherently provide tax benefits, as they’re subject to estate taxes like other assets.

4. Time and Effort: Funding a trust—transferring assets like property titles or accounts—requires effort. If this step is skipped or incomplete, those assets may still go through probate. For those unwilling to manage these details, a will’s simplicity may be more appealing.

Who Should Consider a Revocable Trust?

A revocable trust suits individuals with complex estates, multiple properties, privacy concerns, or a need for incapacity planning. It’s ideal for those in states with lengthy or costly probate processes. Conversely, if your estate is modest, you’re comfortable with probate, or you want to minimize costs, a will alone may suffice.

Ultimately, the right estate planning strategy depends on your assets, goals, and state laws. Combining a will with a revocable trust can offer comprehensive planning, but the decision hinges on balancing convenience, cost, and complexity. For a personalized assessment, we highly recommend consulting an experienced estate planning attorney.

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