DO I NEED A REVOCABLE TRUST INSTEAD OF A WILL?

The current rage in estate planning is the substitution of a revokable trust for a will. However, it is important to understand that each document has advantages and disadvantages.

The will is a creature of statute and is the document that is most familiar to attorneys and lay persons. A will must meet specific statutory requirements to be valid depending on whether it is "holographic" (in one's own handwriting), prepared in written form with witnesses, or prepared in written form with notarization of the witnesses and the testator. In Virginia there is a whole section of the Code devoted to the preparation and interpretation of wills which means that very little ambiguity exists in administration of an estate controlled by a will.

The prime advantage of the will is the disadvantage claimed by proponents of the revocable trust. That is that the administration of an estate controlled by a will is overseen by the circuit court of the county in which the decedent resided at the time of death. This is of vital importance when establishing a testamentary trust (one set up in your will) for a minor or other incompetent person because that is the situation where having the trustee bonded and subject to court supervision is a necessity to guard against ill advised use or outright theft of the trust assets. This can also apply to any other situation where the trustee is less then honest such as appointing only one of your adult children as trustee thereby presenting that person with the ability to squander or steal money or property that belongs to another beneficiary.

The revocable trust also costs two to three times more then a will because you still need a pour-over will (one which transfers any property not in the trust to the trust). This brings us to the prime problem with revocable trusts which is the failure to transfer your real estate, bank accounts, stock funds and other property into the trust. If it is not in the trust it is part of your probate estate and you wasted your money setting up the trust. Finally, the revocable trust does not prevent any estate tax liability but only reduces or eliminates probate taxes (costs to file and administer a will in the county circuit court).