By Melissa Sprinkle, senior associate, Harrison LLP
August is National Make-A-Will Month. Many people wonder what the difference is between a will and revocable (or “living”) trust, and whether they should have one or the other. While they accomplish many of the same goals, there are individual circumstances that may make one structure more appropriate than the other.
Both a will and revocable trust dictate how your assets are distributed when you pass away. In both documents, you can provide that ongoing trusts will be formed to benefit your loved ones, rather than being distributed to such individuals outright. Both can be changed at any time during your life. Neither structure will control certain assets that you own with someone else, such as a joint bank account or certain jointly-owned real property. Further, assets that are governed by beneficiary designations, such as life insurance and retirement accounts, will not be subject to the terms of your will and trust, though you may list your trust or estate (which is formed when your will is probated) as the beneficiary.
There are certain benefits exclusive to choosing a revocable trust structure. First, a trust can own assets during your lifetime, whereas your will “activates” upon your death. While you are living, you are completely in control of your trust and the assets it owns. These assets can be invested, spent and managed as you desire. At your death, while the terms of your trust can no longer be changed, the trust continues to own these assets and they are immediately accessible by your “Trustee,” who has authority to act on behalf of your trust, for the benefit of your beneficiaries. For instance, if you own real property out of the state, you would not be required to undergo a second probate in that state to transfer the property. Because probate can be expensive and inefficient, it can be helpful for your family to have immediate access to funds in your trust without needing to wait for the steps required to initiate probate proceedings.
A revocable trust also provides a greater degree of privacy. When you pass away and your will is submitted for probate, it becomes public record, whereas a trust is very unlikely to ever be made public. Therefore, if you have a recognizable name, wish to make large specific gifts, or otherwise desire privacy for your estate plan, you may prefer to create a revocable trust.
It is a common misconception that a revocable trust functions as a “will substitute” that will avoid probate all together. This is because dying with any assets titled in your individual name, rather than in your revocable trust, will still require you to undergo probate to handle those assets. Therefore, it is necessary to sign a simple “pourover” will, which simply states that anything you own will be distributed to your trust.
Another misconception is that owning assets in a revocable trust provides for creditor protection and tax savings while you are living. Because you have complete control of the trust during your lifetime, the trust is essentially your “alter ego,” and its assets can be reached and taxed as though you owned them in your name.
While there are many benefits to setting up a revocable trust, it may not be necessary for every individual. If none of the above concerns would apply to you, and if you have a straightforward estate plan, you may be able to use a will without facing many obstacles. Probate in Georgia is less complicated and expensive than it is in other states, though Georgia and other states are trending towards implementing increasingly difficult probate requirements. As discussed above, it may still be necessary to undergo probate for any assets titled in your individual name (and not in trust) at your death. Setting up a revocable trust is also often more expensive than creating a will. The right choice is very dependent on each person’s individual assets, wishes, and circumstances.
Melissa Sprinkle is a Senior Associate at Harrison LLP who specializes in estate planning and probate. She is a 2024 graduate of the Philanthropic Advisor Leadership Institute (PALI) of the Atlanta Charitable Advisor Network. To learn how the Community Foundation for Greater Atlanta can support your legacy planning, contact Josh Dukelow, gift planning officer, at 404-588-3208.
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