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Wills and Estates

Revocable Living Trusts

What exactly is a revocable living trust? Should everyone have one? What does it cost to make one and how do they work? 

A revocable living trust is a trust you create during your lifetime to hold and manage your assets. A “trustee” controls the assets in the trust. Often, the person creating the trust is the trustee. When the trust estate is large and complicated, a bank or financial institution may be the trustee. The trust is revocable because you retain the power to modify it or end it during your lifetime.

The Advantages of a Revocable Living Trust

  • Avoiding Probate - In some states, people want to avoid probate so their heirs will not have to pay inheritance tax. That is not a big concern for those with relatively small estates as the federal government does not impose any estate or inheritance tax on estates valued at less than $5.43 million dollars. Under Arizona law, when someone dies, there are no state taxes on the deceased person’s estate unless the estate’s value exceeds the federal limit of $5.43 million dollars.
  • Keeping Information Private - Probate documents are in the public record. Someone who wants to keep assets or estate distribution information private may choose the trust option. For example, an individual may not want business partners, distant relatives, or creditors to know who gets their money and how much each person is to receive. Having property and assets titled in the name of the trust can prevent public searches for property records connected to a name to discover addresses and assets. It can also be an advantage for those who own real property in multiple states by avoiding the need for multiple, expensive probates. 
  • Separation of Assets and Avoiding Challenges - Couples who marry later in life and have significant assets acquired before the marriage may want to use a trust to protect and control their premarital assets. A trust can also minimize family disputes by specifically disinheriting anyone who sues to challenge the trust after the creator’s death. 

The Disadvantages of a Revocable Living Trust

  • Set-up Cost and Work Involved - Setting up the trust costs money. While it is possible to find forms online and draft your own trust document, most people retain a lawyer to help them plan and draft the trust, which may cost as much as $2,000. It takes more than simply drafting the document to make the trust effective. One common mistake people make is setting up the trust but failing to do the work needed to put all the assets into the trust. Anything with a title document will require time and effort to transfer. Real estate, stocks, mutual funds, money market accounts, bonds, boats, cars, and other vehicles are examples of titled property. For each such item, the trustor must change the title to show the item is held in trust.
  • Maintaining the Trust - Once the trust is created, it may or may not be simple to maintain. It depends entirely on the type and value of the assets and changes in circumstances. A trust must be amended as circumstances change.
  • Lack of Tax Advantages - Having your assets in a revocable living trust does not create tax advantages. Since you retain control (the trust is revocable), the assets are subject to the same tax treatment as they would be if no trust existed.
  • Difficulty Refinancing Trust Property - Since the property is titled in the name of the trust, financial institutions can make refinancing difficult by requiring the trustee to provide additional documentation of their power to borrow against trust property.
  • You may still need a Will and an Estate Plan - Often, people may not update the property or beneficiaries listed in the trust. Unless you are supremely confident that everything you own is in the trust and all current beneficiaries are included, you will need a “pour-over Will.” - This is a Will designed to catch any unincluded assets and pour them into the trust.
  • Cutting off Creditor Claims - A.R.S. § 14-6103 requires that upon the death of the owner of the trust, the successor trustee must notify creditors in accordance with A.R.S. § 14-3801. In other words, when the person who created the revocable living trust dies, the trust becomes irrevocable. The trustee is required to publish a notice to creditors once a week for three successive weeks in a newspaper of general circulation in the county, and the trustee must also give written notice to all known creditors of the death. Creditors then have four months to make a claim. Claims not made in the four months are cut off and invalid.


If you are thinking about creating a revocable living trust, consider the pros and cons. Consider speaking to a legal professional when addressing estate planning. 


This website has been prepared for general information purposes only. The information on this website is not legal advice. Legal advice is dependent upon the specific circumstances of each situation. Also, the law may vary from state-to-state or county-to-county, so that some information in this website may not be correct for your situation. Finally, the information contained on this website is not guaranteed to be up to date. Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your jurisdiction.