Which is better, a living trust or testamentary trust?

As you consider what estate planning tools you want to use, you may feel that you should create a trust.

You can create and manage a revocable trust now and benefit from it while you are alive, as well as becoming a source of income for your beneficiaries after you die. On the other hand, you could simply plan for the creation of a testamentary trust in your will, to occur upon your death.


Forbes notes that both types of trust have some of the same benefits. Both allow you to name a trustee to manage the trust after your death, and both provide for the beneficiaries you name according to your wishes.


You may transfer your assets into a revocable trust now. However, if you acquire assets and have not transferred them into the trust at the time of your death, they go through probate. Then, they either become subject to the Colorado intestate laws if you do not have a will, or the executor distributes them according to the instructions in your will if you created one.

If you include instructions to set up a testamentary trust in your will, then the assets must still go through the probate process. However, as soon as the executor settles your estate, paying debts and taxes with the assets from the estate, the remaining assets you designate will go into the trust. Then, the trustee can take over and manage them according to your wishes.

The best of both

A pour-over will may be the solution to the disadvantages of both types of trust. In it, you state that anything not already in the trust at the time of your death should pour over into the trust. As with a testamentary trust, the assets still go through probate, but you have the assurance of knowing that any assets you failed to mention still end up in the trust.