ALP: Why do I need a trust if I have a will?

June, 2004

Although a Will is the backbone of an estate plan, the well crafted estate plan will provide for surrogate decision making in the event of incapacity and facilitate the efficient transfer of assets at death. A revocable living trust can accomplish these goals and add flexibility to the estate plan.

Since your Will becomes operative at death, it cannot govern the management of assets during life. Many times individuals will choose to fund a trust and engage a corporate trustee to manage their investments.

Even if you manage your own assets, a trust can provide for surrogate decision making if you become incapacitated. If you become unable to continue to manage your affairs, the person, bank or trust company you designated as your successor trustee under your trust will take over management of your portfolio and payment of your bills.

Assets placed in a revocable living trust during your life also avoid probate administration upon your death. Probate proceedings are a public record and provide little privacy concerning your financial and family affairs. Further, probate administration can delay distribution of assets to your intended beneficiaries. Finally, probate administration increases the administrative costs of settling your affairs. The provisions of a living trust are not subject to public disclosure, since, unlike a Will, the living trust is not filed with Probate Court. Further, the living trust is not subject to the distribution timing rules, which govern probate assets.