Revocable Living Trusts vs. Basic Wills: Advantages, Disadvantages, and Cost-Benefit Analysis
By Barry Janay & Rachel Walker
The Law Office of Barry E. Janay, P.C.
Estate planning is about more than just preparing documents—it’s about peace of mind for you and your family. Two of the most common tools in estate planning are the basic will and the revocable (living) trust. Below we explore the advantages, disadvantages, and cost implications of each, as well as a quick look at joint and individual wills and family trusts.
Revocable Living Trusts
What Is a Revocable Living Trust?
A revocable living trust is a legal entity you create during your lifetime. You transfer assets into the trust, serve as trustee (typically with a spouse), and retain full control while alive. After your death or incapacity, a successor trustee manages or distributes the assets according to your wishes.
Advantages
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Avoids Probate: Assets in the trust bypass the probate process, saving time and money for heirs and keeping court involvement to a minimum.
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Privacy: Unlike wills, which become public during probate, trusts remain private.
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Control During Incapacity: Should you become incapacitated, your chosen successor trustee can immediately manage assets—no need for court-appointed guardianship.
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Continuity: The trust remains effective after your death, providing ongoing management and protection, especially for minor or special needs beneficiaries.
Disadvantages
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Initial Cost & Complexity: Trusts are more expensive and complex to draft. You must also retitle assets into the trust for it to function properly.
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No Guardianship of Minors: Trusts cannot designate guardians for minor children; a will is still needed for this purpose.
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No Asset Protection from Creditors: Revocable trusts do not shield assets from creditors during your lifetime.
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Maintenance: Requires ongoing attention to ensure that newly acquired assets are properly titled in the trust.
Cost Overview
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Creation: Generally $1,200–$3,500 (may vary significantly based on attorney fees and complexity).
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Long-Term Savings: While costlier upfront, revocable trusts often save money by avoiding probate fees and minimizing delays in asset distribution.
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Administrative Costs: Yearly trust management or legal fees can add to costs if professional trustees or complex asset management are required.
Basic Wills
What Is a Will?
A will is a straightforward, legally binding document that directs the distribution of your assets upon death. It can name guardians for minor children and specify your personal wishes.
Advantages
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Ease and Affordability: Wills are simple to draft and cost less than trusts.
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Guardianship Provisions: A will can specify legal guardians for minor children.
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Flexibility: Easy to update as circumstances change.
Disadvantages
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Probate Required: All assets pass through probate, which is public, may take months to years, and can incur significant costs and delays.
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Privacy Loss: Wills become public records, exposing details of your estate and bequests.
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Limited Asset Protection: Offers no protection if you become incapacitated—separate powers of attorney and healthcare directives are required for that.
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Risk of Outdated Provisions: A neglected will may not reflect your current wishes or circumstances.
Cost Overview
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Creation: Ranges from $200–$1,000+ for a basic will; often at the lower end if simple.
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Probate Costs: Estates settled only by will may face court fees, executor fees, and attorney costs that can far exceed the savings at creation.
Joint Wills vs. Individual Wills
Joint Wills
A joint will is a single document for two people (usually spouses) that dictates the disposition of both estates.
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Pros: Simplifies planning and can be cheaper upfront.
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Cons: Becomes irrevocable after the first death—surviving spouse cannot update the will for life changes, blended families, or new grandchildren. Can lead to legal complications if family circumstances change.
Individual Wills
Most attorneys recommend separate wills for each spouse:
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Flexibility: Each party can update their will as desired. Changes can be made after either spouse’s passing to suit changing circumstances.
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Customization: Allows for individual wishes, unique bequests, and separate philanthropic goals.
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Cost: Slightly more expensive to draft two wills but well worth the long-term flexibility and clarity.
Family Trusts: Benefits and Drawbacks
A family trust is a specific kind of trust (revocable or irrevocable) aimed at managing and distributing family assets, sometimes to minimize estate taxes or provide for future generations.
Benefits
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Asset Protection: Shields assets from creditors and legal conflicts (more so with irrevocable trusts).
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Tax Planning: May offer estate and income tax advantages in certain situations, especially with irrevocable versions.
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Continuity and Control: Allows for detailed control over asset distribution and continuity for family members over generations.
Drawbacks
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Setup and Administration Costs: Family trusts, especially if irrevocable, may require more legal work, higher formation costs, and continuing administrative fees.
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Complexity: More paperwork and ongoing compliance (annual tax returns, trustee duties).
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Potential for Disputes: Poorly-drafted or ambiguous trusts can lead to family strife if beneficiaries disagree on terms.
Conclusion
Wills are generally less expensive and easier to set up, ideal for straightforward estates, appointing guardians, and when privacy is not a concern. Revocable living trusts require higher upfront investment and diligence, but they streamline inheritance, maintain privacy, and provide continuity if you become incapacitated. Joint wills can be attractive for couples with simple situations, but individual wills offer far more flexibility and are almost universally preferable.
Family trusts are powerful tools for asset protection and tax reduction in the right circumstances but involve additional cost and administration.
Making the right choice requires an honest discussion about your goals, family situation, asset complexity, and long-term wishes. Consulting a knowledgeable attorney ensures the plan fits you and avoids costly pitfalls for your loved ones.
The Law Office of Barry E. Janay, P.C.
By: Barry Janay & Rachel Walker
