Can a Living Trust Replace Your Will? [photo-migrate] Many people are hearing more about using a revocable living trust in place of a will. While it is true that a properly managed revocable living trust provides unique benefits, it does not completely replace a will. In determining whether this type of trust is right for you, it helps to understand the major purpose, benefits, and tradeoffs of this estate planning tool. A revocable living trust is created during your lifetime, and you can alter it in any way and at any time. One of its key features is that it allows you to retain control of the management and distribution of your assets. The Probate Issue Many people establish a revocable living trust to avoid probate, which is the legal process of settling your estate. Assets distributed from a trust upon your death do avoid probate. However, the probate process itself is not as burdensome for many estates as in the past. Many states have adopted the Uniform Probate Code, which greatly simplifies the process for many small- to medium-sized estates. But, even with improvements in the probate process, the probated assets in your estate still become a matter of public record, which raises important privacy concerns. Avoiding probate may also make sense if you own properties outside your state of domicile, which means your estate would be subject to multiple probate proceedings. Once you set up a trust, you must transfer assets into it. Failing to do so will subject your assets to probate. Simply signing a trust document without retitling assets renders your living trust useless. If I "Fund"a Trust, Do I Still Need a Will? The short answer is yes. Generally, a revocable living trust cannot entirely replace the need for a will. There are some assets you may not wish to place in a trust. For example, it may be impractical to transfer tangible personal property such as automobiles, furniture, and jewelry to a trust. Consequently, some of your assets will remain outside your trust, making a will necessary to specify your intended beneficiaries. If you have minor children, a will may also be used to designate a guardian for them. Also, some assets may require special considerations. For example, retirement plan accounts ( Individual Retirement Accounts (IRAs), 401(k)s, profit-sharing plans , and Keoghs, to name a few) cannot be retitled to a living trust, although you could change the beneficiary designation to the trust. However, naming someone other than a spouse as beneficiary of a qualified retirement plan may require spousal consent, since in many states, spouses now have rights to retirement plan benefits. In addition, naming your trust, rather than your spouse, as the beneficiary of your qualified plan may have income tax consequences when you die. Advanced Issues Revocable living trusts are complex legal documents. In addition to the advantages mentioned, they offer other benefits, as well. For instance, under the right circumstances, a properly funded living trust can help reduce estate taxes. The bottom line is that qualified legal expertise is a must to help ensure proper planning. Your legal professional can help you examine all variables affecting your property-the type of assets (e.g., real estate, life insurance, bank accounts, savings, business interests, and personal property), where they are located, and how they are titled-and determine if a revocable living trust can benefit your short- and long-term estate planning goals.