What are some drawbacks of a revocable trust?

Washington has a relatively streamlined probate process compared to some states (like California). In some cases, the administrative benefits of a trust may not outweigh the ease and organization of the probate process.

By and large, a revocable living trust is used to avoid probate, but administering a trust during a lifetime can be complicated, expensive, or simply fall off a person’s radar as they age. Creating a trust-based plan typically involves more upfront work and expense than a will. Assets must be retitled into the trust, and beneficiary designations may need to be updated. If assets are left outside the trust, a probate may still be required. Ongoing attention to funding and trust management is critical.

Contrary to common belief, a revocable trust does not protect your assets from creditors. When a trust is revocable and you retain control, the assets remain subject to your creditors during your lifetime. If the trust is irrevocable or established for someone other than yourself, it may garner more protection against creditors, but less control of the assets. Similarly, the IRS considers assets held in a revocable living trust as still “owned” by the creator. You continue to report income on your personal tax return.

Instead, a will provides the freedom to only revisit it when big life events happen. A solid will should include relatively similar protections as a trust. For example, your will should establish who the guardians of your children should be, a trust for young adults to protect them from a large inheritance, a trust for potentially disabled beneficiaries, and broad authority for the executor. Many Washington estate and trust practitioners embed tax protective trusts within wills to assist clients who may have a higher net worth or more complicated family structure.

While a revocable living trust may provide some benefits like privacy, continuity between incapacity and death, and multi-state property ownership, a good attorney will assess whether the revocable living trust brings significant value to you. It is imperative that your attorney walks through the pros and cons of each type of estate plan based on the size and nature of your unique estate.