Many attorneys recommend trusts to their clients, but not everyone needs a trust. Here are some frequently asked questions about trusts, as well as answers to help you decide if a trust might be useful in your situation.
- What's a trust?
- Is there an advantage to using a trust instead of a will?
- What are the disadvantages of using a trust?
- What's the difference between a revocable trust and an irrevocable trust?
- What is a living trust, and how does it work?
- What is an AB trust?
- My father created an AB trust that allows his spouse to use the trust property until she dies. I am supposed to receive any remaining property. After my father's death, can his spouse, who isn't my mother, revoke the trust and disinherit me?
- Is there any way to contest a trust?
- Can a trust override a will?
What's a trust?
A trust is a legal agreement that names someone to hold property for the benefit of others. The trustee is the person or company that manages trust property, and beneficiaries are the people who benefit from the trust. A living trust—the most common type of trust—is a trust created while the trust maker is alive. A living trust is revocable (meaning it can be revoked or amended) during the lifetime of the trust maker. Some people use a will in addition to a trust to distribute their property.
Is there an advantage to using a trust instead of a will?
The main advantage of using a trust is that a trust helps to avoid probate. Probate is the court process that oversees the transfer of your property and payment of any debts after you die. The process can be expensive and time-consuming for your loved ones.
There are some other advantages to a trust as well. They include:
- Privacy. A will becomes public after the property owner dies, but a trust stays private. Only the beneficiaries and the trustee are informed of the trust and its contents.
- Flexibility. A trust can be more flexible than a will, which can be especially useful to those who have complicated relationships or estate planning needs. For example, a husband in a second marriage might want his current wife to be able to live in their house before the house passes to his children from his first marriage.
- Timed distributions. A trust doesn't have to transfer all the property at once and can instead transfer property over time. A parent could set up a trust to take care of the bills of an adult child with special needs rather than giving their child a lump payment. Similarly, parents of young children or young adults may want to provide payments monthly or yearly until the children become mature enough to handle their own money.
- Tax avoidance. Some trusts can be designed to reduce estate taxes. However, most estate taxes affect only the very rich.
What are the disadvantages of using a trust?
A trust might take longer and be more expensive to create than a will. This is because trusts are usually more complicated than a basic will. However, in many situations, a trust can save money in the long run.
When you compare the cost of a will with the cost of a trust, also consider whether your estate will have to go through probate, and look into how much that may cost. You might find that using a trust to avoid probate is well worth the cost of making a trust. You can do this research yourself online or using good self-help books, or an estate planning lawyer can walk you through the options.
What's the difference between a revocable trust and an irrevocable trust?
A revocable trust is one that can be modified or revoked at any time. A simple living trust is a revocable trust that becomes irrevocable when the trust maker dies. In contrast, an irrevocable trust cannot be changed once it has been made. Trusts that are made to avoid estate taxes are typically irrevocable trusts.
What is a living trust, and how does it work?
A living trust is a common type of trust used to transfer property to beneficiaries without going through probate. Typically, after you make a living trust, you transfer property into the trust, and you become the trust’s trustee. A living trust is revocable, so you can change or revoke it during your lifetime. After you die, the trust becomes irrevocable, and your successor trustee distributes the trust property to the beneficiaries following the terms of the trust.
What is an AB trust?
An AB trust is similar to a living trust, but when the trust maker dies, an AB trust splits into two buckets. The property in one bucket goes directly to the beneficiaries, and the property in the other bucket is set aside for use by another person before it passes on to the final beneficiaries. AB trusts are most often used as marital trusts because they allow a surviving spouse to use a deceased spouse’s property before the property passes to the deceased spouse’s children.
For many years, couples also used AB trusts to avoid or reduce estate taxes. However, most couples no longer need to worry about federal estate taxes because married couples—for deaths in 2026—can leave $30 million dollars ($15 million for single people) with no federal estate tax liability. That said, AB trusts can still be useful to less wealthy couples in states that impose state estate taxes.
My father created an AB trust that allows his spouse to use the trust property until she dies. I am supposed to receive any remaining property. After my father's death, can his spouse, who isn't my mother, revoke the trust and disinherit me?
After your father dies, the AB trust becomes irrevocable. The surviving spouse can't revoke the trust. What she can do with the property depends on the terms of the trust.
Is there any way to contest a trust?
A trust can be contested just like a will. A trust contest could be successful if the trust maker was mentally incompetent, forced, unduly influenced, or deceived when setting up the trust.
Can a trust override a will?
A trust can override a will in certain situations. For example, if you transfer your diamond ring into your living trust, the trust technically becomes the owner of the ring, not you. So, if your will leaves the ring to your granddaughter, but your trust names your niece as the beneficiary of the ring, your niece would get the ring. See a lawyer if you have a specific question.