The Pros and Cons of a Revocable Living Trust in Washington State

A Revocable Living Trust is one of the most common estate planning tools.  A Revocable Living Trust offers flexibility, privacy, and a streamlined way to manage your assets during life and after death. But like any estate planning tool, it isn’t a perfect fit for everyone.

Here is a breakdown of the key advantages and potential drawbacks of creating a Revocable Living Trust.

What is a Revocable Living Trust?

A Revocable Living Trust (often simply called a “living trust”) is a legal document that places your assets into a constructive entity, created by law, called a “trust” during your lifetime. You can change, amend, or revoke the trust at any time while you’re alive. Upon your death or incapacity, a successor trustee takes over management of the trust according to your instructions.

Advantages of a Revocable Living Trust

Avoiding Probate: Many clients feel that the biggest benefit of a living trust is that it helps your estate avoid probate.  In Washington, probate isn’t as burdensome as in some states, but it still involves court oversight, public filings, and potential delays.  A properly funded living trust allows assets to pass to your beneficiaries privately and efficiently, often without court involvement.

Incapacity Planning:  A living trust provides for the management of your assets if you become incapacitated. Instead of relying solely on a power of attorney (which can be limited or challenged), your successor trustee can step in to manage trust assets without court involvement.

Privacy:  Unlike a will, which becomes a matter of public record during probate, a living trust generally keeps your estate details private.

Flexibility and Control:  You can serve as your own trustee while you’re alive and competent, maintaining full control over the trust assets. You can amend or revoke the trust at any time.

Efficient Management of Out-of-State Property:  If you own real estate in other states, placing that property in a living trust is essential, as this can help avoid multiple probate proceedings (known as “ancillary probate”) in those states.

Downsides of a Revocable Living Trust

Upfront Cost and Complexity:  Creating a revocable living trust is generally more expensive and complex than drafting a simple will. You’ll need an experienced attorney to ensure the trust is properly drafted and funded.

Funding the Trust:  A trust only avoids probate for assets that are properly titled in the name of the trust. This means you must transfer ownership of bank accounts, real estate, investment accounts, and other assets into the trust — a step many people overlook or find tedious.

No Estate Tax Protection:  A revocable living trust does not, by itself, provide estate tax savings. Washington State has its own estate tax with an exemption amount that is lower than the federal level. You would need additional planning (such as tax-planned trusts) to reduce estate tax exposure.

Doesn’t Eliminate All Probate Proceedings:  Assets left outside the trust may still need to go through probate. Common examples include retirement accounts or personal property not properly titled to the trust.

Ongoing Maintenance:  Your trust requires periodic review and maintenance. If you acquire new assets and fail to retitle them into the trust, those assets may still be subject to probate.

Is a Revocable Living Trust Right for You?

A revocable living trust can be a valuable estate planning tool, especially if you:
– Own real estate in multiple states
– Want to avoid probate for privacy or efficiency reasons
– Have concerns about incapacity and want clear management instructions
– Have a blended family or complex distribution wishes

Conclusion

A revocable living trust offers privacy, probate avoidance, and flexibility, but it requires careful setup and ongoing management. It’s not a one-size-fits-all solution, but it can be a powerful part of a comprehensive estate plan for Washington residents.

If you’re considering whether a revocable living trust is right for you, consult with an experienced Washington estate planning attorney to weigh your options.