Estate planning is not just about how to distribute assets after your passing. It is also about keeping things private, avoiding delays, and staying in control.
It’s important to know the difference between a will and a trust, and how to choose the best option for you. This is especially true if you have complex finances, which may include managing multiple-state real estate, navigating family business succession planning, or holding RSUs (restricted stock units) and concentrated stock.
This article compares a revocable living trust and a will, and explores the advantages of a living trust. The information can help you decide which option may be the right fit for your estate planning goals.
What is a will?
A will is a legal document that outlines how your assets should be distributed after death. It also allows you to name guardians for minor children and appoint an executor to manage your estate.
A pour-over will is often used with a trust. It makes sure that any remaining assets not in the trust go into it upon your death.
A testamentary trust is created by a will and goes into effect after death. It can help distribute assets for beneficiaries, like minor children or those who need regular payments.
What Is a revocable living trust?
A revocable living trust, or revocable trust, is a flexible estate planning tool. It helps manage and distribute your assets while you are alive and after you die, without going through probate court proceedings. Probate is a public and typically long legal process for validating a will and administering an estate.
With a trust, you retain full control while alive and retain the ability to amend or revoke the trust at any time. Upon death, your chosen trustee manages distributing assets according to your instructions, often bypassing probate entirely, ensuring your privacy.
Advantages of a revocable trust
In addition to probate avoidance and privacy protection, a living trust is a vital incapacity planning tool, as it is in effect immediately and can allow for the seamless transition from you to your trustee. Incapacity is when a person cannot make informed choices about their money, health care, or legal issues due to illness, injury, or mental decline.
In addition, trusts can allow for more control over how and when assets are distributed, such as staggered or incentive-based distributions. A trust is often the better fit for individuals who have minor children or those that would benefit from protections, multiple properties, a family business, equity compensation, or alternative investments. As trusts avoid probate, they allow for privacy in estate planning.
If you choose to set up a trust with a corporate trustee requiring ongoing administration, there may be some added cost.
Tax considerations
While a revocable trust doesn’t inherently provide tax savings, it supports broader estate planning strategies. Assets in a revocable trust usually get a step-up in basis when someone dies. This can lower capital gains taxes for heirs.
For larger estates, it may be helpful to look into other tools. These include irrevocable gifting trusts, GST tax planning, portability, and charitable remainder trusts. These tools can help minimize estate taxes and support philanthropic goals, but they require careful coordination with tax professionals. Learn more here: What Type of Trust Is Right For You?
Helpful protections
Certain scenarios can help reveal revocable trust pros and cons. For instance, if you own property in multiple states, a trust can help you avoid ancillary probate in each jurisdiction.
In cases of divorce and remarriage, trusts can protect children from prior relationships and ensure assets are distributed according to your wishes.
Retirement accounts may benefit from see-through trusts, which comply with the SECURE Act and preserve tax deferral opportunities for beneficiaries.
Costs and Timelines
| Planning Tool | Typical Setup Cost via Private Firm | Ongoing Costs |
| Will | $500–$3,000 | Minimal |
| Revocable Trust | $2,000–$10,000+ | Depending on design can have trustee fees, legal updates |
Costs vary depending on your state and the complexity of your estate. The advantages of a revocable trust can often justify the higher initial investment for many estates.
How to choose
Choosing between a will and a trust depends on your priorities. Who needs a trust instead of a will? If avoiding probate, maintaining privacy, and controlling distributions are important to you, a trust is likely the better fit. If simplicity is your main concern, a will may suffice.
For example, an entrepreneur with an illiquid business may benefit from a trust that allows for structured distributions. A bi-coastal homeowner can avoid multi-state probate with a trust. A blended family with minor children may need a trust to ensure equitable and protected distributions.
Implementation checklist
Once you’ve chosen your estate planning path, it’s important to follow through with proper implementation.
- Draft the necessary documents, including your revocable trust, pour-over will, powers of attorney, and healthcare directives.
- Fund the trust by retitling real property, financial accounts, and business entities.
- Update your beneficiary designations. Make sure your estate plan works well with your insurance, tax, and gifting strategies. This will help everything fit together smoothly.
Quick comparison
| Feature | Will | Revocable Living Trust |
| Probate and Timelines | Requires probate; can take months to over a year | Can avoid probate; faster asset distribution |
| Privacy of Distributions | Public court filings | Private administration |
| Incapacity Planning | No coverage; separate Powers of Attorney needed | Built-in incapacity provisions |
| Cost to Set Up and Maintain | Lower upfront cost | Potential higher initial cost; potential ongoing maintenance, based on design |
| Funding Requirements | No funding needed | Requires funding (retitling assets) |
| Multi-State Property Implications | May trigger multi-state probate | Can avoid ancillary probate in other states |
How Mercer Advisors can help
Our estate and tax specialists can collaborate with your Mercer Advisors wealth advisor to help ensure your plan is comprehensive and coordinated. We can also provide corporate trustee services.
Not a Mercer Advisors client? We offer comprehensive wealth management that includes estate planning, financial planning, investment management, tax planning and preparation, and insurance solutions. If you have questions, let’s talk.
