Articles

Will vs Revocable Living Trust - Which is Right for You?

Martin I. Roos

Kerrville Area Business Magazine (January 2010)

As an estate planning attorney I often get asked the difference between a Will and a revocable living trust. A Will is a testamentary document that takes effect at your death. A Will must be probated. Probate is the process of submitting your Will to a court for recognition as a valid instrument and appointing a party (normally an Executor) to carry out the terms of the Will. A revocable trust is created during your lifetime. Assets that are transferred to the revocable trust during your lifetime do not go through probate, but rather the trust instrument itself controls their disposition. A corollary question is whether probate should be avoided.

Texas is one of the easiest and least costly states to probate a Will. Texas has a probate procedure called “independent administration,” which means your Executor (the person you name in your Will to administer and distribute your estate upon your death) only has to file the original Will for probate and file an inventory with the Probate Court detailing your probate assets as of date of death. Creating a living trust merely to avoid probate should not be the motivating factor in deciding between a Will and a revocable trust as your primary estate planning instrument. One or the other does not allow you to avoid any greater amount of the estate tax. A revocable trust also does not provide you any asset protection during your lifetime. If it did, we would all create such a trust and never worry about paying debts again (falls in the adage if it sounds too good to be true, then it is).

In my practice I use the revocable trust as opposed to a Will if a person has out-of-state property that would be subject to probate in the non-Texas state, if a person is concerned about privacy (assets in a revocable trust are not subject to probate so do not become part of the public record), or if a person is concerned about future incapacitation (it is much easier to administer the property of an incapacitated person as the trustee of a trust than as an agent under a statutory power of attorney). The passing of a celebrity like Michael Jackson and the problems facing his estate highlight the need for each of us to have a properly, well-thought out, estate plan.

The first step is creating proper estate planning documents. These documents include a Will (or revocable living trust), and the various lifetime instruments (statutory powers of attorney, medical power of attorney, and living will) that allows you to name agents to make financial and medical decisions for you should you become unable to do so for yourself during your lifetime. Additional planning may be needed given the size of a person’s potential estate and classification of assets.

Marty Roos is a shareholder with Oppenheimer, Blend, Harrison and Tate, Inc. He also serves as the firm’s Chief Operating Office and Practice Group Leader for Estate Planning & Probate. Marty is Board Certified in Estate Planning & Probate by the Texas Board of Legal Specialization. He has also been recognized, for the past six years, as a Texas Super Lawyer. Marty can be reached at 210.224.2000 or mroos@obht.com

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