As you consider how best to structure your estate plan, one of the most common decisions involves choosing between a Last Will ("Will") and a Revocable Living Trust ("Living Trust"). While both tools can effectively direct the disposition of your assets, each has distinct characteristics, advantages, and limitations under Texas law. We write to provide you with a summary of the key considerations to help guide your decision-making prior to our meeting and we can help you through the decision as to what suits your particular situation.
I. Wills: Simplicity
A Will is a legal document that takes effect upon death and directs how your probate assets are to be distributed. In Texas, generally a Will must be admitted to probate through the court process.
Pros of a Will
• Simplicity and Cost: Wills are generally easier and less expensive to prepare than trusts.
• Independent Administration: Texas allows for "independent administration" of estates, which minimizes court supervision and allows executors to act with fewer burdens than in many other states.
Cons of a Will
• Probate Required: Probate is a public court process. Though streamlined and very straightforward in Texas, it still requires time, expense, and court filings.
• Public Record: Once submitted for probate, a Will becomes a public document that anyone can read. If there are any unsecured debts that haven’t been paid (other than taxes and estate administration expenses), then an inventory of the decedent’s probate assets must also be recorded as a public document.
• Multiple Probates: If the Decedent owns real property in other states, multiple probates may be necessary.
• Limited Control During Incapacity: A Will only becomes effective upon death; it does not provide a mechanism for managing assets during lifetime incapacity (requiring reliance on a power of attorney or court guardianship).
II. Revocable Living Trusts: Flexibility with Privacy
A Revocable Living Trust is a private agreement created during life to manage your assets during your lifetime and to distribute them after death, typically without court involvement.
Pros of a Living Trust
• Avoids Probate: Properly funded trusts can bypass the probate process entirely, reducing court costs and delays, but if probate assets are left outside of the trust, probate may still be necessary.
• Privacy: Trust administration remains private and does not become part of the public record.
• Continuity During Incapacity: If you become incapacitated, your successor trustee can step in to manage trust assets without court intervention.
• Avoids Out of State Probate: If a person owns real property in other states and retitles it to the trust, one can avoid the extra time, expense, and delays of out-of-state probates.
• Provides Immediate Access to Funds Upon Death: At Decedent’s death, the Trustee has access to funds without having to wait on probate.
• Will Contest Protection: Trusts that have been in existence and properly administered for years before a decedent’s death may make it more difficult for a disgruntled beneficiary or heir to successfully challenge than a Will. The fact that a successor trustee need not wait for probate court appointment to access trust assets after a decedent’s death (like an executor would) may also provide additional benefits in the event of a contest or challenge.
Cons of a Living Trust
• Upfront Cost and Complexity: Drafting a trust and properly funding it (retitling assets) typically requires more time and legal expense than a Will.
• Ongoing Maintenance: To be effective, the trust must be continuously funded as new assets are acquired.
• No Guardianship Provisions: A separate Will (often called a “pour-over” Will) is still necessary to nominate guardians.
• Unfunded Probate Assets: A Pour Over Will is also necessary to capture any unfunded probate assets and “pour” them over into the trust.
Which is Right for You?
The decision between a Will and a Living Trust depends on your individual goals, the complexity of your estate, your desire for privacy, and your preferences for asset management in the event of incapacity. In many cases, younger Texans with straightforward estates and close-knit families find a Will with independent administration to be sufficient. However, for clients with larger estates, privacy concerns, out-of-state property, or family dynamics requiring greater control, a Living Trust can provide enhanced benefits.
Our firm routinely prepares Wills and Living Trust/Pourover Wills based on the client’s specific facts and desires. We will be pleased to help you evaluate what might suit you best and we look forward to helping you engineer your estate plan.
Warm regards,
Granstaff, Gaedke, & Edgmon, P.C.