Wills

Wills vs Trusts

As a lawyer who prepares a lot of Wills and Trusts, I frequently meet with prospective clients who are unsure if a Will or a revocable living trust (or “RLT”) would best meet their needs.  Typically a well drafted Will would suffice because the actual number of people in Texas that actually “need” an RLT are very few.  However, there are several specific situations where an RLT can be advantageous when compared to a typical Will.   Probate Avoidance:  If you transfer all of your assets to the name of your RLT, you can then avoid the need for your family to go through probate when you die.  However, if you forget to transfer one asset to the RLT or later buy an asset in your personal name instead of the name of the RLT, you might not be able to avoid probate for that one asset.   Out-Of-State Property:  Perhaps the most common advantage of the RLT over a Will involves the transfer of property located in another state or country.  For example, I have a friend who inherited the family real estate located in Florida.  If she simply had a Will, we would need to probate her Will in Texas to transfer her Texas property and again in Florida to transfer the Florida property.  However, by transferring her out-of-state property to the RLT, she can avoid probating her Will in Florida.   Will Contest:  An RLT can provide better protection against a challenge or contest of the Will or the RLT.  If you have a Will that has been filed for probate, then a court case is opened in the county courts and it is very easy for someone to challenge the Will in that open court case.  It might be as simple as writing a letter to the Judge.  If the client had an RLT instead of a Will, there is no need for the Trustee to open a court case at all.  This means that a person wishing to challenge the RLT must jump through more legal hoops and file a lawsuit in the appropriate court to challenge the RLT, which makes it that much harder for him or her fight your wishes.   Mobility:  For a family that moves from state to state, an RLT offers the benefit of being much more mobile than a Will.  An RLT typically has a provision that allows the Trustee to change the applicable law which governs the trust with a simple notice to the Trustee.  This provision can be triggered each time the family moves to a new state to change the governing law of the trust match the new state’s laws.  Conversely, a Will is more likely to need drastic revisions to comply with the new state’s laws.   Management During Disability.  With the aging of the baby boomers, more clients need an RLT to assist with management of their assets during a disability.  If an aging spouse or an aging parent is losing their ability to manage their own finances, an RLT can be used as an asset management vehicle.  The spouse without the disability or […]