A family trust is a type of living trust known as a revocable living trust, reports About.com. Its advantages include the avoidance of probate, protection from challenges, delineation of assets and designation of authority if the trustee becomes incapacitated. Disadvantages include the expense of setting up the trust and the continuing necessity of a will to disburse noninvestment assets.Continue Reading
Having a family trust instead of a will allows the beneficiaries to avoid the time, expense and public exposure of going through the court procedure called probate, explains About.com. Because family trusts are private documents, the details of the disbursement of assets do not become part of public record. Family trusts also enable the grantor to maintain control over assets as trustee and make changes to the trust at any time. Married couples can specify the separation of private assets from communal property. Trustees can also avoid conservatorship of assets by designating a successor trustee to take over control if the primary trustee becomes incapable, according to Nolo.
On the downside, revocable living trusts set up by lawyers can be time consuming and expensive to set up, maintain and modify, cautions Nolo. Those with simple estates may find a will easier to use in transferring assets to beneficiaries.Learn more about Financial Planning