What Are the Disadvantages of a Revocable Living Trust?

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The disadvantages of a revocable living trust include the expense of setting up the trust, the difficulty in transferring assets into the trust, and the fact that a will is still needed to supplement it, states About.com. Revocable living trusts are also subject to challenge by dissatisfied relatives, says AARP.

Lawyers are needed to set up revocable living trusts, and fees normally run into thousands of dollars, reports AARP. The initial costs in setting up a trust are higher than writing a last will and testament, states About.com. Although one of the main reasons for setting up a revocable living trust is avoiding probate, any assets not covered by the trust are still subject to probate, as reported by the New York Times.

The transfer of assets into a revocable living trust is a complex process, reports About.com. The creator of the trust must communicate with banks, insurance companies, investment firms and other agencies to create new documents and sign over titles, deeds and certificates. Qualified retirement accounts cannot be signed over to a living trust without payment of full income tax and a 10 percent penalty tax if the owner of the account is less than 59.5 years old. Some states regard the transfer of vehicles to a trust as sales subject to state taxes. A special will called a pour over will is needed to transfer unfunded property to the revocable living trust at the time of death.