Testamentary Trusts vs. Revocable Living Trusts in Spokane

At first glance, testamentary trusts and revocable living trusts may seem quite similar. If you’re assessing your estate planning options in Spokane, however, it is important to understand the subtle differences between various trusts. These slight differences may be beneficial or detrimental, depending on your unique circumstances. What exactly is the difference between a testamentary trust and a revocable living trust?

Main Differences 

The main difference between a revocable living trust and a testamentary trust is when it is created and involves probate. A testamentary trust must go through probate before its formation, while a revocable living trust avoids probate. This is because a testamentary trust can only be established by following instructions left behind in a Last Will and Testament – and every Will must go through probate.

In addition, a revocable living trust goes into effect during life, while a testamentary trust is established after the grantor’s passing. Because a revocable living trust is effective during life, it can also help avoid guardianships.

Surprising Similarities Between Revocable Living Trusts and Testamentary Trusts

 Despite these differences, there are a few notable similarities between testamentary trusts and revocable living trusts. Aside from their date of formation, they are both trusts – and they can provide your assets with protection against taxation, creditors, lawsuits, and more.

Perhaps the most notable similarity is the flexibility of these two trusts. A revocable trust may be adjusted and modified over time, and so can a testamentary trust. Remember, a testamentary trust begins as a set of instructions in your Will. Changing the testamentary trust is as easy as rewriting your Will – and you can do this at any time, assuming you have capacity.

Testamentary Trusts Also Share Features With Irrevocable Trusts 

That being said, testamentary trusts are also similar to irrevocable trusts. As its name suggests, an irrevocable trust cannot be canceled after its formation. However, a testamentary trust has the same basic feature because the grantor is no longer alive after its formation. In this regard, testamentary trusts and irrevocable living trusts function similarly.

The added flexibility of a testamentary trust during life makes them somewhat unique. Although they are irrevocable after your death, you can modify them during life by altering your Will. For some estate planners, this represents the “best of both worlds.”

This is especially true when you consider the affordability of a testamentary trust compared to an irrevocable living trust. The latter trust is usually complex, and it may require extensive legal assistance. On the other hand, a testamentary trust only goes into effect after your passing. This means that your estate will inherit the costs of the trust formation – and you can enjoy more of your assets during life. A testamentary trust will also not get some of the benefits of establishing an irrevocable trust during life, such as estate tax reduction or long-term care protection for the trust creator.

Can a Spokane Estate Planning Lawyer Help With Trusts? 

If you’d like to delve deeper into the world of trusts, continue this conversation alongside an experienced estate planning lawyer in Spokane. These legal professionals can help you assess various trust options, helping you determine the right choice for your family. Contact Moulton Law Offices today to get started with an action plan.

Sources: 

app.leg.wa.gov/WAc/default.aspx?cite=182-516-0140

app.leg.wa.gov/rcw/default.aspx?cite=11.103&full=true