Why Many Families Choose a Living Trust Over a Will-Based Trust

7 April 2026

Last week, we covered how it works when you create a trust through your will. This week, I'll show you how a trust created during your lifetime (a revocable living trust) works, what your family experiences when you set up a living trust, and how to decide which approach best fits your situation.

As a quick refresher, a “testamentary trust” is created in your will and only comes into existence after your estate goes through probate. As a result, your family could wait many months, and sometimes even years, while the court oversees the probate of your will and the establishment of your trust. If your objective is to keep your family out of court and have total privacy after your incapacity or death, a testamentary trust won't accomplish that.

A living trust, created during your life and properly “funded,” will keep your family out of court, provide the privacy you likely want for them, and generally make things a lot easier for the people you love when something happens to you.

In this article, I'll explain how living trusts provide those benefits, help you weigh the tradeoffs between the two approaches, and explain how to be your own best advisor and make informed decisions.

How a Living Trust Works

A living trust, often called a revocable living trust, is created and funded while you're living and have legal capacity to make decisions. You transfer ownership of your assets into the trust now, naming yourself as the initial trustee. This means you maintain complete control during your lifetime. You can buy property, sell property, change investments, and manage everything exactly as you did before. The trust doesn't restrict you in any way.

The trust agreement includes detailed instructions on what happens to trust assets when you die or become incapacitated. Within the trust agreement, you will name a successor trustee, the person who will take over management of the trust assets when you can no longer serve as trustee. You specify who receives trust assets, when they receive them, and under what conditions. All the protective provisions you might include in a testamentary trust can be included in a living trust.

Here's the crucial distinction between a living trust and a testamentary trust: when you die or become incapacitated and cannot make decisions for yourself, the living trust already exists and owns your assets. Your successor trustee doesn't need court permission to begin managing trust property. There's no probate filing. No waiting for court approval. No public disclosure of your assets or beneficiaries. The successor trustee simply follows the instructions you've provided in the trust agreement.

This means your family avoids the delay, expense, and public exposure of probate court. Your trustee can immediately pay bills, manage property, and begin distributing assets to your beneficiaries according to your timeline. If you've included provisions protecting your children's inheritance until they reach a certain age, those protections start working immediately. Your family benefits from your planning right when they need it most.

The living trust also provides protection if you become incapacitated before you die. If illness, injury, or cognitive decline leaves you unable to manage your own affairs, your successor trustee can step in and handle things for you without requiring your family to go to court for guardianship proceedings. Your chosen successor simply steps into the role you've defined for them.

However - and this is critically important - living trusts only control assets that are actually transferred into the trust. In estate planning, we call this "funding" the trust, and it's a crucial step many people overlook, even when working with a lawyer. If you create a living trust but never change the title on your house or retitle your bank accounts, then those assets aren't protected by the trust. When you die, those assets will need to go through probate. The trust can only control what it owns.

This is why working with a lawyer who has systems and processes set up specifically for estate planning, and ideally our comprehensive planning process, is so important. Creating a trust agreement is just the first step, and it needs to be part of a full plan that covers all of your assets, ensures all of your assets are titled properly, all beneficiary designations are clarified and updated, and you are clear on how to keep everything up to date throughout the rest of your life. We have processes in our office for supporting just that.

Now that you understand how both types of trusts function, the question becomes: which one makes sense for your specific situation?

Slide title

Write your caption here

Button

Understanding the Real Tradeoffs

Why would anyone choose a testamentary trust if living trusts offer so many advantages? The main reason comes down to upfront effort and cost. Creating a testamentary trust is usually less expensive initially because you're just adding provisions to your will. You don't have to transfer assets into a trust during your lifetime. All that happens in the probate process after you die.

For some, the cost of probate might not be substantial enough to justify the upfront expense of creating and funding a living trust. Others aren’t concerned about the probate process at all.

But consider the hidden costs your family will face. Even a simple

probate proceeding typically costs several thousand dollars in legal fees and court costs. The process usually takes at least months, and often years. Your family must handle this while they're grieving, gathering documents, communicating with attorneys, and dealing with ongoing stress.

Compare that to the experience with a properly funded living trust. Your family meets with your successor trustee, who already knows what you wanted. They work together to handle immediate needs, notify beneficiaries, and distribute assets according to your wishes. The process is private, usually faster, and doesn't require court oversight. For most families, this experience is far less stressful and ultimately less expensive than probate.

Consider your family dynamics as well. If you have family members who might contest your wishes, the public nature of probate can fuel disputes. Anyone can access probate files and see who you left what to. A living trust keeps everything private, which can help minimize conflict.

In addition, consider your specific assets and their complexity. If you own real estate in multiple states, you're facing probate proceedings in each state where you own property. A living trust holding all your real estate avoids this entirely. If you own a business, probate delays can harm business operations. A living trust allows seamless continuation of business management.

Understanding these tradeoffs helps clarify which approach makes sense for your situation. But you don't have to figure this out alone. Work with an experienced attorney - who’s also your trusted advisor - who can walk you through your specific circumstances so you’re confident you’re doing the right thing by those you love.

How We Help You Create a Plan That Actually Works

At Legacy Sentry Law, we don't push everyone toward one type of trust. Instead, we start by helping you understand what will actually happen if you become incapacitated or when you die, based on the specifics of your family dynamics and your assets. We’ll walk you through the real costs, the real timeline, and the real experience your loved ones will face. Then we'll help you evaluate what matters most to you and make an informed decision that fits your desires and budget.

If a living trust makes sense for your situation, we won’t just create the document and send you on your way. We'll help you properly fund the

Slide title

Write your caption here

Button

trust, ensuring assets are retitled correctly, and nothing is overlooked. Then, we’ll make sure your plan stays up to date throughout your lifetime and that you have support when you need it.

Most importantly, we'll be there for your family when you're gone or if you become incapacitated. That ongoing relationship makes all the difference. Your loved ones won't be left alone trying to figure out what to do. They'll have a trusted advisor who knows you, knows your wishes, and can guide them when you can’t.

Schedule a complimentary 15-minute discovery call to ensure your plan works when it matters most.

This material is provided for educational and informational purposes only and does not constitute ERISA, tax, legal, or investment advice. Legal advice specific to your situation must be obtained separately.

< Older Post

Newer Post >

Five Reasons an Outright Inheritance Could Put Your Children’s Future at Risk

by Paul Suh • 1 October 2026

Learn five risks of leaving an outright inheritance and how a protective trust may help safeguard your children’s inheritance for the future.

The SECURE Act Changed IRA Inheritance Rules. Does Your Trust Still Work?

by Paul Suh • 22 September 2026

Your IRA trust may need a 2026 review. Learn how SECURE Act rules, taxes, and beneficiary designations can affect your family's inheritance.

Is a Will Enough? What Your Estate Plan Still Needs

17 September 2026

You did it. You made a will. Maybe you've been meaning to get it done for years, or maybe something finally prompted you to take that important step. Either way, you now have something in place to tell your family and the court what you want to happen to your assets when you die. That's worth celebrating. But here's what I want you to know: making a will is the beginning of estate planning, not the end. A will doesn't address several important pieces, and overlooking them can leave your family with unnecessary court involvement, confusion, or financial headaches. If you already have a will, this is the checklist I recommend reviewing next. First, Understand What You Actually Signed A will is a legal document that tells a court what you want to happen to your assets after you die. That's the scope of it. It does not keep your family out of court. In most states, assets that pass through a will must go through probate, which is a public process that can take months, cost thousands in fees, and freeze your assets while it's happening. A will also only controls what's in it, not what you said. If you told someone you were leaving them your car and it isn't reflected in the document, that person may contest the will in court. Will contests are more common than most people realize, and even unsuccessful ones add cost, delay, and family conflict to an already difficult time. A will also does not control assets that have their own beneficiary designations: your retirement accounts, your life insurance, your bank accounts with transfer-on-death designations. Those pass outside your will entirely, by whatever name is on the form you filled out, sometimes years ago. And a will does nothing if you're incapacitated rather than dead. If you're in an accident and can't make decisions for yourself, your will doesn't activate. Your family may have no legal authority to manage your finances or make medical decisions without going to court first. The bottom line: A will is not a complete plan. Here's what building the rest of it actually looks like. Step 1: Your Beneficiary Designations May Already Be Overriding Your Will Most people don't realize this when they sign their will: an entirely separate set of documents already controls who gets a significant portion of their assets. Those documents are your beneficiary designation forms, and they operate completely outside of your will. Here is the part that matters. When your will conflicts with a beneficiary designation, the form wins. Every time. A judge does not have the authority to override it. Your will does not have the authority to override it. Whoever is named on that form gets the money. What I see most often: a former spouse still named on a retirement account. A parent who has since passed away. A child named directly as a beneficiary, which means that money is now subject to court-supervised guardianship until they turn 18, regardless of what your will says about how you wanted it managed. Every retirement account, life insurance policy, and bank account with a transfer-on-death designation needs to be reviewed. Each one needs a named primary beneficiary and a contingent beneficiary that reflects your family as it actually is today, not as it was the first week of your first job. Key takeaway: Your will does not control your beneficiary designations. Your beneficiary designations control themselves. Reviewing every form is one of the first things I walk through with every family in a Life & Legacy Planning® Session, because it is one of the most common places where an otherwise solid plan falls apart. Step 2: Find Out Whether Your Trust Is Actually Funded If you received a trust along with your will, ask one specific question: Are my assets actually in the trust? A trust only controls what is inside it. Signing a trust document creates a legal container. Transferring your assets into that container, which is called funding the trust, is a separate step that many families never complete. If your house, bank accounts, and investment accounts are still titled in your name rather than your trust's name, they will go through probate regardless of what the trust says. In my experience, unfunded trusts are one of the most common estate planning failures I encounter. Families pay for a trust, assume their estate is protected, and then their loved ones end up in probate court anyway because no one ever transferred the assets. The trust document is sitting in a folder. The assets never made it in. If you don't know whether your trust is funded, ask. If it isn't, funding it is the next priority. A trust you signed but never funded offers no more protection than no trust at all. Funding is not automatic. It has to be done deliberately, often with help.

What Malcolm-Jamal Warner’s Estate Dispute Teaches Us About Follow-Through

by Paul Suh • 8 September 2026

Malcolm-Jamal Warner’s estate dispute highlights why estate planning requires more than documents. Learn how follow-through can protect your family.

What Happens If You Become Incapacitated Without an Estate Plan?

by Paul Suh • 1 September 2026

Learn how guardianship works, when it becomes necessary, and how proper estate planning may help your family avoid costly court proceedings.

Friends Don't Let Friends Delay Estate Planning

by Paul Suh • 25 August 2026

Learn how to encourage friends and family to create an estate plan with compassionate conversation starters that protect the people they love.

Beyond the $1,000: Why Every Parent Should Coordinate a Trump Account With Their Estate Plan

by Paul Suh • 18 August 2026

If your baby was born on or after January 1, 2025, the federal government has set aside $1,000 for your child. The account is available now. Contributions opened on July 4, 2026. And most families have not yet taken the step to claim it. The account is called a Trump Account. It was created by the One Big Beautiful Bill Act, signed into law in 2025, and it is one of the most significant new financial tools for young families in years. A seed investment that grows tax-advantaged for up to 18 years can become something meaningful by the time your child is ready to use it. Here is what you need to know, and what you should do next. What Is a Trump Account? A Trump Account is a tax-advantaged investment account created for a child. For every U.S. citizen born between January 1, 2025 and December 31, 2028, the federal government has committed to making a one-time $1,000 deposit, provided the child has a valid Social Security number. Beyond that government seed contribution, parents, grandparents, and other family members can contribute up to $5,000 per year. Before making personal contributions beyond claiming the $1,000 deposit, it's worth a call with your attorney first. There are unsettled regulatory questions about the gift tax treatment of family contributions that are still being worked out, and the right answer for your family depends on your specific situation. Employers can contribute up to $2,500 per year through a qualified written plan. If you own your own business, that means you could potentially contribute both as a parent and as an employer, for a combined $7,500 per year in additions to the account. The government's $1,000 does not count against either limit. The account is structured as a type of individual retirement account for the child. The account grows through stock market returns on a tax-deferred basis, meaning no taxes on the growth while the funds are invested, but ordinary income tax applies when distributions are eventually taken. The funds cannot be withdrawn before the child turns 18. At 18, the account converts to an IRA the young adult controls directly, though distributions before age 59½ are subject to income tax and a 10% early withdrawal penalty. That 18-year window is significant: a $1,000 deposit growing at a modest 7 percent average annual return becomes roughly $3,400 at maturity, without any additional contributions. Add even moderate contributions from family members over those years and the account can represent a meaningful head start. How the account is invested matters, and that is an active decision you make when you open it. Trump Accounts are not limited to babies born in the 2025 to 2028 window. Any child age 17 or younger with a valid Social Security number can have an account opened on their behalf. The free $1,000 pilot contribution, however, is only available for children born in that four-year window. The bottom line: A Trump Account is a federally seeded, tax-advantaged investment account for your child. The $1,000 is yours to claim. The contributions you add on top grow alongside it for up to 18 years. How to Open One To open a Trump Account, families can file a one-page Form 4547 with the IRS or use the online portal at TrumpAccounts.gov. Contributions may begin as of July 4, 2026. The form walks through basic information about the child, including their Social Security number. If your child does not yet have a Social Security number, you will need to obtain one before completing the filing. To claim the government's $1,000 pilot contribution, you must make an affirmative election on the form: check the box in Part III, line 7. That election is what triggers the deposit. The account can be open and active without it, but without that election, no pilot contribution follows even though the account is up and running.