Why You Need a Revocable Trust Instead of a Will

There are several reasons you might want one.  You cause a revocable trust (also called a living trust) to set conditions on how your assets are used.  Putting assets in a trust speeds up a will’s settlement: “It would save a lot of money,” says Reno attorney Bradley Anderson.  Plus, a trust enables big savings, assuming your net worth is in the millions; if the assets of the first of you to die go to a trust, the surviving spouse will have a smaller taxable estate.

That said, setting up a trust is expensive - about $2,800 to $5,000 on average.  And a revocable trust, which you can cancel or alter while you’re alive, requires retitling your assets.  If you think a trust makes sense for you, consult an estate attorney.  You can find names in your area at www.naepc.org. 

Taxes with and without a revocable trust

Assume $1M of assets are in trust before first spouse’s death:  If the estate tax exemption returns $1M in 2013, a revocable trust for a couple with $2M in assets could help cut the estate tax bill after the second spouse dies.    

WITHOUT THE TRUST:  The surviving spouse will pay an estate tax of $435,000 on the $2M.

WITH THE TRUST:  The surviving spouse will get $1M and the trust will get another $1M – eliminating the estate tax payment since the surviving spouse met the estate tax exemption of $1M.