Disadvantages of Revocable Living Trusts
Revocable living trusts are popular estate planning tools, and for good reason—they avoid probate, provide privacy, and let you maintain control of your assets while you’re alive. But they’re not perfect, and for many people, the downsides outweigh the benefits.
Setting up a revocable living trust costs significantly more than writing a will. They offer no creditor protection and don’t save you a dime in estate taxes. Ongoing maintenance requires constant attention, and if you don’t properly fund the trust, you’ll go through probate anyway—defeating the whole purpose.
Before committing to a revocable living trust, understand what you’re giving up and what problems you’re not solving.
What Is a Revocable Living Trust?
A revocable living trust (also called a living trust or inter vivos trust) is a legal entity you create to hold your assets during your lifetime. You transfer property into the trust, manage it as the trustee, and can change or cancel the trust anytime you want.
When you die, a successor trustee you’ve named takes over and distributes assets to your beneficiaries according to your instructions—all without going through probate court.
Key features:
- You maintain control – You can modify, revoke, or terminate the trust whenever you want
- You act as trustee – You manage the assets just like you always did
- Avoids probate – Assets in the trust pass directly to beneficiaries without court involvement
- Provides privacy – Unlike wills, trusts don’t become public record
- Enables continuity – If you become incapacitated, your successor trustee takes over seamlessly
Sounds great, right? It is for some people. But revocable living trusts come with significant drawbacks that many people don’t discover until it’s too late.
Major Disadvantages of Revocable Living Trusts
High Initial Setup Costs
Creating a revocable living trust costs substantially more than writing a will.
Attorney fees for a trust: $1,500-3,000 for a straightforward trust, $3,000-5,000+ for complex estates with multiple properties or business interests.
Attorney fees for a simple will: $300-1,000 for most people.
That’s 3-5 times more expensive just to set up the trust. And that’s before you factor in the cost of transferring assets into the trust—which requires retitling property deeds, changing beneficiary designations, and potentially paying filing fees for real estate transfers ($50-200 per property in many counties).
For estates under $1 million with straightforward wishes, a will often accomplishes the same goals for a fraction of the cost.
Ongoing Administrative Burden
Unlike a will that sits in a drawer until you die, revocable living trusts require active, ongoing management.
You must properly fund the trust. Every asset you want to avoid probate must be transferred into the trust’s name. That means:
- Retitling real estate deeds
- Changing bank account ownership
- Transferring investment accounts
- Updating vehicle titles
- Reassigning business interests
You must maintain the trust. When you acquire new assets, you have to remember to put them in the trust. Buy a new house? Transfer it to the trust. Inherit money? Fund it into the trust. Open a new bank account? Title it in the trust’s name.
Forget to transfer assets and they’ll go through probate anyway, defeating the purpose of having the trust.
Record-keeping requirements. Some trusts require separate tax filings (though most revocable trusts don’t during the grantor’s lifetime). You’ll need to maintain records showing what assets are in the trust and keep track of any changes.
Professional management fees. If you hire a professional trustee or corporate trustee, expect to pay 1-2% of the trust’s value annually. On a $500,000 trust, that’s $5,000-10,000 per year.
Many people set up trusts with the best intentions but fail to properly fund them or keep them updated. The result? They’ve spent thousands on a trust that doesn’t actually accomplish what they wanted.
Do Revocable Living Trusts Need Notarization?
Yes, revocable living trusts typically require notarization to be legally valid, though requirements vary by state. The notary verifies your identity and confirms you’re signing the trust document willingly and knowingly—this helps prevent fraud and challenges to the trust’s validity later.
When creating the trust, you’ll sign the trust document in front of a notary public who will apply their official seal and signature. Most attorneys include notarization as part of their trust creation services, arranging for a notary to witness your signature when you execute the documents.
For real estate transfers, if you’re moving property into your trust, the deed transferring ownership must be notarized before it can be recorded with the county. This applies to every piece of real estate you transfer—houses, rental properties, land, commercial buildings. Without proper notarization, the county recorder won’t accept the deed and the property won’t actually be in your trust.
Trust amendments and restatements also require notarization. If you modify your trust terms later or completely restate the trust, those changes must be notarized to be legally enforceable. Simply writing changes on the original document doesn’t work—amendments need the same formalities as the original trust.
Some states have specific requirements about witness signatures in addition to notarization. A few states require one or two witnesses to sign the trust document along with notarization. Check your state’s laws or work with an attorney to ensure compliance.
Getting Trust Documents Notarized
Most people get trust documents notarized through their attorney’s office when they create the trust. The attorney either has a notary on staff, brings one in for the signing, or uses a service like BlueNotary. This is included in the attorney’s fee ($1,500-3,000) and handles everything at once.
If you’re creating a trust using online legal services or DIY trust software, you’ll need to find a notary yourself. Options include:
Banks and credit unions often provide free notary services to customers. Call ahead to confirm availability and ask if they’re familiar with notarizing trust documents—some notaries are more comfortable with simple documents.
Mobile notaries come to your location for $75-150, which makes sense if you’re elderly, have mobility issues, or if multiple family members need to sign documents. They bring experience with estate planning documents and can handle complex signings.
Online notary services like BlueNotary let you get trust documents notarized via video call for $25. This works well if you’re comfortable with technology and need flexibility in scheduling. You can complete the notarization from home in 15-20 minutes.
For trust amendments or deed transfers years after creating your trust, online notarization is often the quickest option since you don’t need to schedule around an attorney’s availability or take time off work to visit a notary during business hours.
No Creditor Protection
Assets in a revocable living trust are not protected from creditors—at all.
Because you maintain complete control over the trust and can revoke it anytime, the law treats trust assets as if you still own them personally. That means:
Creditors can reach trust assets. If someone sues you and wins a judgment, they can go after assets held in your revocable living trust just as easily as assets in your personal name.
Divorce proceedings include trust assets. In a divorce, assets in your revocable living trust are fair game for division. The trust doesn’t protect them.
Bankruptcy exposes trust assets. If you file for bankruptcy, trust assets are considered part of your estate and available to creditors.
Medicaid considers them your assets. Applying for Medicaid? Assets in your revocable living trust count against you for eligibility purposes.
Irrevocable trusts provide creditor protection because you give up control. Revocable trusts don’t because you keep control. You can’t have it both ways.
Zero Estate Tax Benefits
Revocable living trusts do not reduce estate taxes. At all.
The IRS includes all assets in a revocable living trust in your taxable estate when you die. Since you maintained control over the assets during your lifetime, they’re still considered yours for tax purposes.
For most people, this doesn’t matter. The federal estate tax exemption for 2025 is $13.99 million per person ($27.98 million for married couples). If your estate is under these amounts, you won’t owe federal estate taxes whether you have a trust or not.
For wealthy estates, it’s a problem. If your estate exceeds the exemption amount, assets in your revocable living trust are taxed at rates up to 40%. The trust does nothing to shelter them.
State estate taxes might still apply. Some states have estate tax exemptions much lower than the federal level—as low as $1 million in Oregon and Massachusetts. A revocable living trust won’t help you avoid these either.
If estate tax reduction is your goal, you need irrevocable trusts, charitable trusts, or strategic gifting—not a revocable living trust.
Probate Avoidance Isn’t Guaranteed
The main selling point of revocable living trusts is avoiding probate. But this only works if you properly fund the trust with all your assets.
Assets outside the trust still go through probate. Forgot to transfer your rental property into the trust? It goes through probate. Didn’t retitle your car? Probate. Opened a new bank account in your personal name? Probate.
Many people create trusts and assume they’re done. Years later, they’ve acquired new assets that were never transferred to the trust. When they die, those assets end up in probate court anyway—defeating the purpose and wasting the money spent creating the trust.
You still need a “pour-over” will. Even with a trust, you need a will to catch any assets that weren’t transferred. This will goes through probate, which means you haven’t completely avoided the process.
Some assets can’t go in a trust. Retirement accounts like 401(k)s and IRAs shouldn’t be titled in a trust during your lifetime—they lose their tax-deferred status. You name the trust as beneficiary instead, but those accounts themselves stay outside the trust.
Privacy Isn’t Absolute
While trusts are more private than wills, they’re not completely confidential.
Disputes can make trusts public. If beneficiaries fight over the trust or challenge its validity, those court proceedings become public record. The trust document gets filed with the court and anyone can read it.
Creditor claims may require disclosure. If creditors pursue trust assets, the trust becomes part of court records.
Real estate records are public. When you transfer property into a trust, that deed is recorded with the county and becomes public information. Anyone can look up who owns property in a trust.
Financial institutions see the trust. Banks, investment companies, and anyone you do business with will see that assets are held in trust and may ask for copies of the trust document.
Privacy is better than with a will that goes through probate, but it’s not ironclad.
Complexity and Potential for Mistakes
Revocable living trusts are more complex than wills, creating more opportunities for errors.
Funding mistakes are common. People frequently:
- Forget to transfer some assets
- Transfer assets incorrectly
- Fail to update beneficiary designations
- Don’t coordinate the trust with retirement accounts
Trustee mismanagement risks. Your successor trustee must understand their duties and manage assets properly. Poor choices in trustee selection can lead to:
- Mismanagement of investments
- Failure to distribute assets according to trust terms
- Conflicts of interest
- Even outright fraud
Amendment and restatement confusion. When you want to change your trust, you can amend it or restate it entirely. People often make inconsistent changes or fail to properly execute amendments, creating confusion about which version controls.
Multi-state property complications. If you own property in multiple states, each property must be transferred according to that state’s laws. Miss one state’s requirements and that property ends up in probate in that state—requiring ancillary probate proceedings.
Additional Costs and Considerations
Real estate transfer issues. Some mortgage lenders don’t like properties in trusts. You might need to:
- Notify your lender
- Get lender approval
- Deal with “due on sale” clauses that could technically be triggered
Title insurance complications. Transferring property into a trust can affect title insurance coverage. You may need new policies.
Business ownership challenges. Transferring business interests into trusts can be complicated, potentially triggering buy-sell agreements or requiring partner approval.
Refinancing hassles. If you want to refinance property in a trust, some lenders require you to temporarily transfer it back to your personal name, then retransfer it after closing.
When a Revocable Living Trust Makes Sense
Despite these disadvantages, revocable living trusts are appropriate for some people:
You own property in multiple states. Avoiding ancillary probate in several states justifies the cost and complexity.
You value privacy highly. If keeping your estate out of public record matters enough to justify the extra expense, a trust accomplishes this better than a will.
You want seamless incapacity planning. If you become unable to manage your finances, your successor trustee steps in immediately without needing court approval for conservatorship.
Your estate is complex. Multiple properties, business interests, and blended families benefit from the detailed instructions possible in trusts.
You have time and resources for ongoing management. If you’re organized and have the money for professional help, maintaining a trust is manageable.
Better Alternatives for Many People
For estates under $1-2 million with straightforward situations:
Simple will with proper beneficiary designations. Name beneficiaries directly on retirement accounts, life insurance, and payable-on-death bank accounts. These pass outside probate automatically. Use a will for everything else. Total cost: $300-1,000.
Transfer-on-death deeds. Many states allow real estate to pass via TOD deeds without probate or trusts. Cost: minimal filing fees.
Joint ownership with right of survivorship. For married couples, joint ownership with right of survivorship automatically transfers assets to the surviving spouse. No trust needed.
Durable power of attorney and healthcare directives. Handle incapacity planning with these documents instead of relying on a trust. Cost: $200-500.
For most people, these simpler tools accomplish the same goals as revocable living trusts at a fraction of the cost and complexity.
Bottom Line
Revocable living trusts are useful estate planning tools in specific situations, but they’re oversold. For many people, the high upfront costs, ongoing administrative burden, lack of creditor protection, and zero tax benefits make them a poor choice compared to simpler alternatives.
The trust industry markets these products aggressively, sometimes to people who don’t need them. Before spending $2,000-5,000 on a trust, honestly assess whether your situation justifies the cost and complexity.
For estates under $1-2 million with straightforward family situations, a simple will combined with beneficiary designations and transfer-on-death instruments accomplishes most goals at far lower cost. Save the revocable living trust for situations where its specific benefits—multi-state probate avoidance, enhanced privacy, complex estate management—actually matter to you.
FAQ
What are the main disadvantages of revocable living trusts?
High setup costs ($1,500-3,000+), ongoing administrative burden of properly funding and maintaining the trust, no creditor protection, zero estate tax benefits, and probate avoidance only works if you properly fund the trust. For many people, simpler estate planning tools accomplish the same goals at lower cost.
Do revocable living trusts protect assets from creditors?
No. Because you maintain complete control over the trust and can revoke it anytime, creditors can reach trust assets just as easily as assets in your personal name. This includes lawsuits, divorce proceedings, bankruptcy, and Medicaid eligibility determinations.
Do revocable living trusts reduce estate taxes?
No. Assets in revocable living trusts are included in your taxable estate when you die. If estate tax reduction is your goal, you need irrevocable trusts or other strategies. Most people don’t owe estate taxes anyway—the federal exemption is $13.99 million per person in 2025.
Can a revocable living trust completely avoid probate?
Only if you properly fund it with all your assets. Assets outside the trust still go through probate. Many people create trusts but forget to transfer all their property, defeating the purpose. You’ll also still need a “pour-over” will for any assets that weren’t transferred.
How much does it cost to set up and maintain a revocable living trust?
Initial setup costs $1,500-3,000 for straightforward estates, potentially $3,000-5,000+ for complex situations. Add costs for retitling assets ($50-200 per real estate transfer). If you hire professional trustees, expect ongoing fees of 1-2% of trust value annually. On a $500,000 trust, that’s $5,000-10,000 per year.
Is a revocable living trust better than a will?
Not necessarily. For estates under $1-2 million with straightforward situations, a will combined with beneficiary designations often accomplishes the same goals at lower cost. Trusts make sense for multi-state property owners, those wanting enhanced privacy, complex estates, or situations needing seamless incapacity planning.
Can trustees mismanage or steal from revocable living trusts?
Yes. Poor trustee selection can lead to mismanagement, conflicts of interest, or fraud. Choose trustees carefully and consider professional trustees for large or complex trusts. Regular oversight and review by attorneys can help prevent problems.
