Summary
A will requires probate, which costs 3-7% of the estate value and averages 20 months to complete. A living trust avoids probate and provides incapacity protection. Without one, your family may face conservatorship proceedings costing $20,000 or more. You retain full control of a revocable trust and can buy, sell, and manage assets exactly as before. Keep retirement accounts out of your trust; transferring an IRA or 401(k) into a trust will trigger a taxable distribution and may incur penalties. Trusts also let you control how and when heirs receive assets, preventing a sudden windfall from harming a beneficiary who lacks financial maturity.
David L. Berkowitz
Investor and Financial Advisor
Nearly 40 years of experience — from trading and research at a $250 million hedge fund in the early 1990s, to two decades as a portfolio manager, to teaching thousands of executives and employees how to create shareholder value through EVA and value-based management. Now helping individuals and families become shareholders through disciplined investing, concentrated portfolios, and direct stock ownership.
The estate plan you think you have
Most people believe their will protects their family. They signed it, had it notarized, and stored it securely. Job done.
This belief costs families billions of dollars every year.
A will is a set of instructions for a judge. The document itself avoids nothing. It initiates a process called probate, which can take nearly two years and consume 3-7% of your estate.
A revocable living trust works differently. It holds and manages your assets during your lifetime and transfers them after death without court involvement. The five truths that follow explain why this distinction matters more than most families realize.
1. Your will is a one-way ticket to probate court
What happens when you die with only a will?
The court validates it. The court pays your debts. The court distributes your assets. Every step occurs in public, on a timeline controlled by the court, with fees paid from your estate.
Nationally, the average probate lasts 20 months. In California, expect a 9-18-month timeline. In New York, 7-9 months minimum. Complex estates or family disputes can extend this to several years.
The cost is substantial.
Probate typically costs 3-7% of the estate’s gross value. For a $750,000 estate (common in today’s housing market), this translates to $22,500- $52,500 in attorney fees, court fees, appraisals, and administrative costs. That money comes directly from what you intended to leave your family.
Privacy disappears.
Probate filings become public record. Anyone can see what you owned, what you owed, and who inherited what. For some families, this transparency invites unwanted attention from creditors, salespeople, or estranged relatives.
Multi-state ownership multiplies the problem.
Own a vacation home in another state? Your executor must open a separate “ancillary” probate proceeding there. Each state has its own court fees, attorney requirements, and timelines. Total costs can double or triple.
A living trust sidesteps this entirely. Because the trust (not you personally) owns the property, no probate is required in any state.
2. Your “in case of emergency” plan for life, not just death
What happens if you become incapacitated?
Your will does nothing. A will only takes effect after death. If a stroke, accident, or dementia leaves you unable to manage your affairs, your family has one option: petition a court for conservatorship. A judge appoints someone to make decisions on your behalf.
Conservatorships are expensive.
Establishing a conservatorship can cost $20,000 or more in many counties. Filing fees alone run about $1,100 in California. Add attorney fees, court investigator fees, and ongoing reporting requirements. The conservator must also post a bond and file annual accountings with the court.
A living trust solves this problem.
When you create a revocable living trust, you name a successor trustee. If you become incapacitated, this person steps in immediately to manage your finances. No court, no delay, no public proceedings. Your bills get paid. Your investments stay managed. Your family avoids the stress and expense of proving to a judge that someone needs to take over.
3. You don’t actually give up control
The most common objection: “I don’t want to lose control of my assets.”
This fear rests on a misunderstanding. With a revocable living trust, you serve as the grantor (creator), the trustee (manager), and the beneficiary (the person who benefits). You hold all three roles at once.
Nothing changes in your daily life. You can buy and sell property in the trust. You can refinance your home. You can move money between accounts. The trust is a legal entity you control entirely.
The word “revocable” matters.
You can modify the trust at any time. You can add or remove beneficiaries. You can change successor trustees. You can dissolve the trust entirely and regain control of your assets. This flexibility distinguishes a revocable trust from an irrevocable trust, which cannot be easily changed once created.
4. The smartest move is leaving certain assets out
Not everything belongs in a trust.
Some assets transfer more efficiently through other mechanisms. Placing the wrong assets in a trust can create tax problems or administrative headaches.
Retirement accounts (IRAs, 401(k)s)
Transferring ownership of a retirement account into a trust triggers a taxable distribution. The IRS treats any change of ownership as a 100% withdrawal. You’ll owe income taxes on the entire balance, plus a 10% early withdrawal penalty if you’re under 59½.
The solution: use the beneficiary designation form provided by your plan administrator. This bypasses probate and directs assets to heirs without tax consequences.
Life insurance policies
Like retirement accounts, life insurance proceeds pass directly to named beneficiaries through the policy’s beneficiary designation. No probate. No trust required for basic transfers.
Vehicles
Transferring a car into a trust can complicate insurance and financing. Some insurers are unfamiliar with trust ownership, and selling a trust-owned vehicle requires extra paperwork. Unless your vehicle is highly valuable, leaving it outside the trust and using a transfer-on-death registration (available in many states) makes more sense.
5. Building a legacy, not just handing out cash
A will distributes assets. A trust can shape behavior.
The typical will follows a “die and distribute” model: everything passes to beneficiaries in a lump sum. A trust provides greater control over timing and conditions.
Staged distributions
A 22-year-old inheriting $500,000 at once faces different risks than one who receives $100,000 at 25, another $150,000 at 30, and the remainder at 35. A trust can set these milestones, protecting beneficiaries from the documented tendency to spend sudden windfalls quickly.
Incentive provisions
Some trusts match a beneficiary’s earned income dollar-for-dollar, encouraging work. Others fund specific goals, such as a down payment on a first home, graduate school tuition, or the start-up costs of a business.
Protection from external threats
Assets held in certain types of trusts can be shielded from a beneficiary’s creditors, divorcing spouses, or lawsuits. This protection doesn’t apply to all trust structures, but an estate planning attorney can design provisions that preserve your intentions against future unknowns.
The real question
Over the next two decades, an estimated $124 trillion will transfer between generations. Most of it will pass through probate because 62% of millennials have no will or trust. Families who plan ahead will preserve more wealth, maintain greater privacy, and face fewer crises when illness or death occurs.
A living trust is a framework for managing your assets during your lifetime, protecting yourself in the event of incapacity, and transferring wealth intentionally. The difference between a will and a trust is the difference between hoping things work out and designing how they will.
Endnotes
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Trust & Will 2024 Probate Study – National survey of 1,000 Americans on probate knowledge, finding average timeline of 20 months and costs of 3-7% of estate value https://trustandwill.com/learn/2024-probate-study
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Trust & Will Key Stats – Breakdown of probate costs ranging $22,500-$52,500 for a $750,000 estate and Great Wealth Transfer statistics ($124 trillion) https://trustandwill.com/learn/what-americans-dont-know-about-probate-court-key-stats
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Stephens Wealth Management Group – Probate costs of 3-7% and public record nature of probate filings https://stephenswmg.com/the-costs-of-probate-court/
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O’Flaherty Law – Ancillary probate explanation and how multi-state property doubles or triples probate costs https://www.oflaherty-law.com/learn-about-law/what-is-ancillary-probate-what-happens-if-someone-dies-owning-property-in-multiple-states
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James Burns Law – Conservatorship costs averaging $20,000 and up in several counties https://www.jamesburnslaw.com/conservatorships-2
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Schomer Law Group – California conservatorship filing fees ($1,115) and cost breakdown https://www.schomerlawgroup.com/conservatorship-in-california-2/how-much-does-it-cost-to-file-for-conservatorship-california/
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Charles Schwab – Conservatorship overview, administrative and legal costs, and trust vs. will comparison https://www.schwab.com/learn/story/how-to-minimize-need-conservatorship
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ACTEC (American College of Trust and Estate Counsel) – How revocable trusts avoid probate and protect during incapacity https://www.actec.org/resource-center/video/how-does-a-revocable-trust-avoid-probate/
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Consumer Financial Protection Bureau – Definition and structure of revocable living trusts https://www.consumerfinance.gov/ask-cfpb/what-is-a-revocable-living-trust-en-1775/
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Charles Schwab – Revocable living trust vs. will comparison and legacy planning features https://www.schwab.com/learn/story/revocable-living-trust-vs-will
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Trust & Will – Why retirement accounts should not be transferred into trusts (IRS treats as taxable distribution) https://trustandwill.com/learn/how-to-transfer-retirement-accounts-into-a-trust
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IRS – Retirement plan distribution rules and early withdrawal penalties https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals
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IRS – Rollovers of retirement plan and IRA distributions, 60-day rules and tax consequences https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
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Record Courier – Assets to keep out of trusts, including vehicles and complications with trust ownership https://www.recordcourier.com/news/2025/aug/16/what-assets-to-keep-out-of-trust/
