separate revocable trust


Jennifer Short, JD Oct. 3, 2023

One of the main reasons families create trusts is to avoid probate. Probate is the court process during which a deceased person's estate is distributed. The court determines if the will is legally valid and then the money and property are distributed to named beneficiaries.

There are many pros and cons to probate, and after weighing them, some families may prefer to establish a testamentary trust. A testamentary trust is created through the decedent's will and comes into existence at death. Assets must still pass through probate before the trust is funded and money is given to beneficiaries.

There are many reasons why a testamentary trust may be a great option. For example, they allow you to direct the amounts and timing of distributions to beneficiaries and reduce the upfront costs associated with the creation of the trust.

The Probate Decision

When deciding if a testamentary trust is right for your family, consider whether avoiding probate is a priority for you. You should work with an attorney to weigh the pros and cons, which vary depending on jurisdiction and the size of your estate.

Because it is a court process, probate involves oversight by a judge or court clerk until all distributions have been made. Trustees of a testamentary trust may need to meet regularly with the probate court. The court will monitor its administration until the trust expires. While some may find this oversight burdensome, it may provide peace of mind for those who want additional assurance that the trust will be administered as they intended.

During the probate process, an estate may have to pay court, executor's, attorney's, accounting, appraisal, and bond fees, among others. How much the estate pays varies depending on the size and complexity of the estate. Sometimes, these expenses can quickly add up and reduce the amount your beneficiaries will ultimately receive. Complex estates can also be very time-consuming. Beneficiaries of a testamentary trust may not receive funds for months or years.

You should also keep in mind that probate court documents become public records. Your will, and information about the testamentary trust it creates upon your death, can be accessed by any member of the public. Personal information about your family, such as who inherited what and how much, will be available for anyone to see. Understandably, this lack of privacy tends to steer many people away from testamentary trusts. In contrast, a revocable living trust does not become part of the public record. This allows the identities of your beneficiaries and the details about your estate to remain private.

Using a Trust to Maintain Control Over the Distribution of Money and Property

Beneficiaries under a will generally receive their assets as soon as it's authorized by the probate court (except for minor children, whose inheritance may be held in a custodial account until they reach the age of 18). But, if you include a testamentary trust in your will, the terms of the trust can specify the timing and amounts of the distributions to your beneficiaries. Although a testamentary trust is created when you pass away, you outline the instructions for the trust during your lifetime. You can change these instructions at any time while you're still alive.

The trustee you name in your will has a responsibility to make distributions according to the instructions you provide in your will. As a result, you can provide your family members with the resources they need over time until the trust terminates. You can specify if you want the trust to continue until your children reach a certain age or meet a particular milestone. Also, you can instruct what distributions should be used for, such as costs associated with your children’s health and education.

Who May Benefit from Using a Testamentary Trust

A testamentary trust may be beneficial for many families. For example, parents of:

  • Young children

  • Adult children who have many creditors or poor spending habits

  • Disabled children who need ongoing support and need to maintain eligibility for government benefits

  • It may also protect beneficiaries in the event of divorce by safeguarding their inheritance.

Deferring Creation of the Trust Until You Pass Away

A testamentary trust is a good option for families looking to cut costs now. A testamentary trust will be created and funded after you pass away. So, the costs of establishing it will be borne by your estate, making it a more affordable option during your lifetime. This also means that you won't have to change ownership of any accounts and property during your lifetime. It will be part of the funding process after your death. Your wealth may have time to grow over the course of your lifetime, and your estate may be better able to cover the costs when you pass away.

A revocable living trust is typically a bit more expensive to create but has the added benefit of probate avoidance.

Work with Our Experienced Estate Planning and Probate Attorneys in Dublin, OH to Choose the Right Trust

Revocable living trusts and testamentary trusts both offer benefits that can ensure that your wishes are carried out and your family and loved ones are cared for. If you are unsure about which type of trust you should include in your estate plan, call us today at 614-389-9711 to set up an appointment.