A revocable trust, commonly called a living trust, is created during the lifetime of the grantor. This type of trust can be changed at any time, while the grantor is still alive. Because a revocable trust becomes operative before the will takes effect at death, it would take priority if there is any discrepancy between the two when it comes to assets titled in the name of the trustor that designate the trust as the beneficiary (e.g., life insurance).
A recent Investopedia article asks “What Happens When a Will and a Revocable Trust Conflict?” The article explains that a trust is a separate entity from an individual. When the grantor or creator of a revocable trust dies, the assets in the trust are not part of the decedent grantor’s probate process.
Probate is designed to distribute the deceased individual’s property pursuant to the instructions in his will. However, probate doesn’t apply to property held in a living trust because those assets are not legally owned by the deceased person. They’re owned by the trust. As a result, the will has no authority over those assets.
Let’s say that Bernie (who is the grandfather) has two children named Pat and Junior. Bernie places the old family home into a living trust that says Pat and Junior are to inherit that house. Twelve years later, Bernie remarries. Right before his death, he executes a new document that says is the house is to go to his new wife, Andrea.
In this case, for the home to go to his new wife, Bernie would’ve had to amend the trust to make the house transfer to his wife effective. Thus, the home goes to the two children, Pat and Junior.
Sound confusing? It can be. An experienced estate planning attorney can help to ensure that your intentions can be carried out without any issues. As mentioned, a revocable trust is a separate entity and doesn’t follow the terms of a person’s last wishes when they die.
An estate planning attorney can make sure everything is legally binding and the way you intend it.
It’s important to note that while a revocable trust supersedes a will, the trust only controls those assets that have been placed into it. Therefore, if a revocable trust is formed, but assets aren’t moved into it, the trust provisions have no effect on those assets at the time of the grantor’s death.
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