Wills vs. Revocable Trusts

You probably already know what a Will is. Wills are often dramatized on television and in movies. We always see someone drafting a Will under harrowing experiences, like in a fox hole in war or on their death bed. Then, of course, there’s always the dramatic reading of the Will before the surviving family members. I always found those to be awkward scenes. Perhaps it’s because, and this may surprise you, in real life there is no such thing as a public reading of a Will. Typically, the only people who read the Will are the Executor, the attorney representing the estate and some nameless clerk at the Surrogates Court. Beneficiaries are usually given a copy of the Will to review as well, but there isn’t typically a public reading.

Simply stated, your Will is your final set of instructions and governs the disposition of your assets. This means that it specifies who gets your belongings and under what circumstances. It also determines who you appoint to have certain very important powers in specific important roles.

If you’ve done any research about preparing your Will you might have come across two very different fields of thought regarding what kind of Will to draft. Let’s simplify the issue, shall we? One school of thought says you should draft a very traditional Will; one that becomes effective only when you die and otherwise sits idly by until that day. Another school of thought recommends creating a Revocable Trust, otherwise known as a Living Trust and a Will called a Pour Over Will.

What are the differences?

A Revocable Trust or Living Trust is a trust that you create for yourself while you are alive. Once the trust is created you would re-title and rename all your assets so as to be owned in the name of the trust you created. The Pour Over Will then says that any assets that you own at the time of your death that you have not put into the trust get poured into the trust upon your death, hence a “Pour Over” Will.

There are two reasons to draft a Revocable Trust and Pour Over Will instead of a traditional Will. First, every Will must be probated. Probate is the process by which the Will is submitted to the Surrogates Court in the State and County in which you resided at the time of your death. The Court reviews and approves the Will, gives the power to an Executor to follow the Will to the letter and close out the proceeding when everything is done. Whenever a Will is filed with the Surrogates Court to be probated, the Will, like every other court document, becomes a public record. As a public record it is accessible to anyone who wishes to read it. The Surrogates Court will not generally publish the Will on its website, but an interested party could go down to the Court House and request the Will to read and copy it.

Most of us wouldn’t care whether someone else read our Wills, generally because most people wouldn’t care to read them. However, if you are a celebrity or public figure the public would likely be interested to know the contents of your Will. Trusts, unlike Wills are not probated, meaning they are not usually submitted or filed with a court, and as such, will not become public records. For people who are very concerned with their privacy, a Revocable Trust may be the way to go.

The other reason to draft a revocable trust rather than draft a traditional will is because in some states the process of probate is either very lengthy or very expensive, or even both. In theory the Revocable Trust would help avoid probate, but again, if not every asset has been transferred to the trust, your Pour Over Will would have to be probated anyway. In some states, the process of probate is not lengthy at all and does not cost a lot either. If you live in one of these states and you are not particularly concerned that some stranger would be interested in reading your will, drafting a traditional will would certainly be a better choice and in the long run will make your life easier. Here is another example where the assistance of a qualified and experienced attorney can help you make the right decision.

The downside to a Revocable Trust is that it can take a good deal of time and money to transfer all your assets to your trust.

For example, the deed to your home must be in the name of your trust. If you already own your home at the time you draft your Revocable Trust the deed is likely already in your name and you will need to transfer it to the name of your Revocable Trust. You will need to redraft and record a new deed naming the Revocable Trust as the owner.

Now, if you are like me, you probably have a mortgage on your home. If so, you are generally prohibited from making transfers to the title of your home without the consent of your lender. The lender may or may not permit such a transfer and if it does permit such a transfer, the transfer may require additional paperwork and additional legal fees to complete the process. Moreover, after going through all this trouble, you may not even own the property at the time of your death, in which case you spent a good deal of time and money for nothing!

This process would have to be repeated for every other asset you own. This would mean that your bank accounts would have to be changed to the name of the trust too. Owning everything in the name of your trust will surely add a level of complication to your life and so the question is whether it is worth it.

Also, remember that anything that you own at the time of your death that you did not title in the name of the Revocable Trust will be poured into the trust by your Pour Over Will. But guess what? Your Pour Over Will must be probated! And when it is probated a copy of the Revocable Trust will likely be filed along with the Pour Over Will. There goes your privacy!

In sum, give careful thought to whether a revocable trust and pour over will make sense for you before opting for them instead of a traditional will.

We invite you to contact us to learn more about estate planning and the services we offer.