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Why may a Revocable Trust be more beneficial than just having a Will in some situations?

A:

While you still need a Will to designate your Executor and a Guardian (if you have minor children), the transfer of assets takes place under a Will only at the time of your death.  With a Trust, you might transfer some assets at death, but more importantly you will do so throughout your life.  Since you have unlimited control over the Revocable Trust, you are not losing any rights by funding the Trust during your life.  The Trustee (usually yourself while living and competent) spends the income of the Trust and principal as needed for anything you wish, and for the health, maintenance, support, and education of your designated beneficiaries.  If you are disabled by a stroke or heart attack or need to go to a nursing home, the Trust will take care of you.

            Unlike the guardianship in a Will which stops at age 18, the Trust will appropriately distribute assets for your children as long as you want.  A dynasty Trust will take care of multiple generations over many decades.

            All of the assets transferred pursuant to the Will are listed in the Inventory, which is open to the public as part of the probate process.  On the other hand, any property you place in the Trust during your lifetime or by beneficiary designation remains completely private.

            If you leave assets to your spouse under your Will you avoid estate tax through the use of the unlimited marital deduction, but you do not take advantage of your estate tax exemption.  Although the federal exemption is temporarily unlimited, states such as Ohio still have a very limited exemption.  When the surviving spouse dies, the assets you willed to the spouse will be taxed in the spouse’s estate.  If instead, you took advantage of your exemption in your Trust, your spouse would be able to have the benefit of these assets without any of the exempted funds being included in the spouse’s estate.

            Instead of transferring all of your business interests to the next generation immediately upon your death through a Will, allow the Trustee to groom your successors through a gradual distribution of the company shares, LLC membership units, or partnership interests over a period of years.

            These and many other benefits are available through the proper use of a Revocable Trust.

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