Why You May Not Need a Living Trust

A living trust is an excellent way to avoid probate. But do you really need one?

Updated 9/27/2022

One of the most common questions about estate planning Nolo encounters is whether making a will is enough, or whether it's smarter to create a living trust for the purpose of avoiding probate. Not surprisingly, the answer is, "It depends." Some people need a living trust immediately, others will never need one, and most of us fall somewhere in the middle.

Avoiding Probate With a Living Trust

First things first. Living trusts help you avoid probate, but why is avoiding probate necessary? Probate is the process through which a person's property is inventoried and distributed after death. Many people aim to avoid probate because it's time-consuming and expensive. (To learn more about probate, read Why Avoid Probate? and Probate FAQ.)

There are a growing number of ways to transfer assets to inheritors free of probate within weeks or, at most, months of death. These include making gifts before death, adding a pay-on-death designation to a bank account, holding your house in joint tenancy with right of survivorship with your spouse or partner, and naming a beneficiary for life insurance and retirement accounts. (For more on these methods, see How to Avoid Probate.)

But only the living trust can be used for all types of property while offering the broad planning flexibility of a will. With a living trust, for example, you can name alternate beneficiaries to inherit property if your primary beneficiary dies before you do. That's something you can't accomplish with joint tenancy or a pay-on-death bank account.

Drawbacks to Living Trusts

Living trusts do have a downside. Compared to wills, living trusts are considerably more time-consuming to establish, involve more ongoing maintenance, and are more trouble to modify. A lawyer-drafted trust typically costs more than a thousand dollars, though the cost will shrink dramatically if you use a self-help tool to make your own trust. Also, you'll still need a simple will, as a back-up device, even if you create a trust.

Is a Living Trust Right for You?

These drawbacks are outweighed by the benefits for people who have large estates and for those who are likely to die in the next ten years or so. To decide if you need a living trust, consider these factors:

How Old Are You?

Living trusts often do not make sense for middle-income people in decent health who are under the age of 55 or 60. Remember, a living trust does nothing for you during your life. It follows that there is usually little reason for a 45-year-old to worry about probate costs for many years. In the meantime, a serviceable will, which is easier to establish and live with, will do a fine job of transferring your property to your loved ones in the highly unlikely event that you die without warning.

Another reason why it makes little sense for a healthy younger person of moderate means to worry about probate avoidance is that the problem may go away. In just the last ten years, easy-to-use probate-avoidance techniques, such as being able to name a beneficiary to inherit securities free of probate, have gained wide acceptance. This trend will probably continue.

How Rich Are You?

After age, the biggest factor in deciding whether or not to create a living trust is wealth. At the risk of oversimplifying, the wealthier you are, the more you can save for your inheritors by avoiding probate. For example, a 45-year-old with $10 million might conclude it's not too soon to think about probate avoidance, just in case. A 45-year-old with $300,000 might sensibly decide to wait many years before making a trust.

What kinds of assets you own is significant, too. Owning a small business or other assets that you don't want tied up during probate might push you to create a living trust at a younger age. Even if there's only a small chance that you'll die soon, you don't want to risk making your executor report to a judge for a year or more if you die unexpectedly.

Are You Married?

If you are married, and you and your spouse plan to leave the bulk of your property to one another, there is less reason to obsess about avoiding probate at an early age. If, like many couples, you own your big assets together, probate won't be necessary for those assets. And for other property, most states let surviving spouses use expedited probate procedures that are faster and cheaper than standard probate.

Next Steps

If you determine that you would benefit from having a living trust, you can make one today with Nolo's Quicken WillMaker & Trust. Or check out Make Your Own Living Trust, by Denis Clifford (Nolo), which explains how to create a trust, transfer property to the trust, and amend or revoke the trust at any time. And to see everything Nolo has to offer when it comes to planning your estate, visit our Wills, Trusts & Estates Center.

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