Revocable Trusts for Physicians: How They Work, Costs, and the Funding Checklist Most People Miss

Reviewed by Miyoung Won, M.D., FACOG

15 min read | TL;DR 2 min

Updated: 12/15/2025

Why Physicians Use Revocable Trusts

Physicians often face circumstances that make revocable trusts particularly useful:

Probate Avoidance

Probate is the court-supervised process of validating a will and transferring assets. The problem isn't the process itself—it's the time, cost, and public nature of it.

Timelines vary by state and complexity, but it often takes 6–18 months. During that period, your family's access to assets may be restricted.

Costs add up quickly in high-fee states. California is the most cited example. Under California Probate Code § 10810 (attorney fees) and § 10800 (executor fees), statutory compensation is based on gross estate value—not net equity:

A physician with a $3 million home and a $2.5 million mortgage still faces fees calculated on the $3 million gross value—not the $500,000 in actual equity.

Florida follows a similar pattern under Fla. Stat. § 733.6171, with presumed reasonable fees starting at 3% on the first $1 million. However, Florida's statute explicitly notes these fees aren't mandatory—they're negotiable and may not be appropriate for all estates.

In contrast, Texas uses "Independent Administration," where typical ranges reported by attorneys for a simple probate might cost $3,000–$7,000 total. New York caps surrogate court filing fees at $1,250 for estates over $500,000, though attorney fees vary.

The bottom line: In high-cost probate states like California and Florida, a properly funded trust can save the estate tens of thousands of dollars.

Privacy Protection

When a will goes through probate, it becomes public record. Anyone can look up what you owned, who inherited it, and who's managing the estate.

For physicians—particularly those with high profiles, contentious family situations, or simple privacy preferences—this transparency creates risks. Beneficiaries can become targets for solicitors or scammers. A trust keeps asset details private.

Multi-State Property Simplification

If you own real estate in multiple states, your family would otherwise need to open a probate proceeding in each state where you own property. Lawyers call this ancillary probate.

That vacation home in Arizona? Separate probate. The rental property in Florida? Another proceeding. Each comes with its own attorneys, fees, and delays.

A revocable trust can hold real estate in any state, eliminating ancillary probate entirely when properly funded.

Incapacity Planning

A will does nothing if you're alive but unable to manage your affairs. Without proper planning, your family might need to pursue a court-supervised conservatorship or guardianship—an expensive, time-consuming, and public process.

With a revocable trust, your successor trustee can step in immediately when you're incapacitated, accessing trust assets to pay bills, manage investments, and handle your affairs without court involvement.

A Physician's Perspective

Dr. Miyoung Won, an OB/GYN-turned-occupational medicine physician and Physician Living's Executive Brand Ambassador, established a revocable trust when her children were young:

What a Revocable Trust Does Not Do

Let's address the biggest misconception directly: a revocable trust provides no asset protection from creditors or malpractice judgments during your lifetime.

None. Zero.

The legal principle is straightforward: creditor access is coextensive with grantor access. Because you retain the power to revoke the trust and regain full ownership of the assets at any time, a court can compel you to exercise that power to satisfy a judgment. In the eyes of the law, a self-settled revocable trust is indistinguishable from assets you own outright.

This means:

• A malpractice judgment can reach everything in your revocable trust
• Divorce proceedings can divide trust assets
• Business creditors can pursue trust property
• The IRS can collect unpaid taxes from trust assets

If asset protection is a priority—and for many physicians it should be—the conversation centers on different tools: adequate malpractice coverage with tail insurance, umbrella liability policies, state-specific exemptions (such as homestead protections in Florida and Texas), retirement account protections, and in some cases irrevocable trusts or domestic asset protection trusts (DAPTs). These strategies require careful analysis with an attorney who understands both estate planning and creditor rights in your state.

A revocable trust serves estate planning functions—probate avoidance, privacy, incapacity planning—not liability protection functions.

Revocable Trust vs. Will

Understanding the differences helps clarify when each makes sense:

Living Will vs. Living Trust: Clearing Up the Confusion

These terms sound similar but serve completely different purposes:

A living will (technically an "advance directive" or "directive to physicians") addresses healthcare decisions if you're unable to communicate—whether you want life support, artificial nutrition, or certain medical interventions. It has nothing to do with asset management.

A living trust (revocable living trust) addresses asset management and distribution. It has nothing to do with healthcare decisions.

Both are important. Neither replaces the other. Your estate plan should include healthcare directives alongside your trust or will.

Why Most Physicians Need Both

Even with a revocable trust, you likely need a will—specifically, a "pour-over will."

Not everything you own belongs in a trust. Some assets (like automobiles in certain states, or items you simply never retitled) may still be in your individual name when you die.

A pour-over will catches these items and directs them into your trust, ensuring everything follows your trust's distribution plan. Note: the pour-over will still goes through probate for anything left outside the trust—it just ensures those assets ultimately follow the trust's terms rather than your state's default intestacy laws.

The pour-over will also names guardians for minor children. Trusts can't do this; only a will can designate who should raise your children if something happens to you.

The Other Estate Planning Documents Physicians Still Need

A revocable trust handles asset management and distribution—but it's only one piece of a complete estate plan. Physicians should also have:

Durable Power of Attorney (Financial) Authorizes someone to handle financial matters on your behalf if you're incapacitated. While your successor trustee can manage trust assets, a power of attorney covers everything else: filing tax returns, managing non-trust accounts, handling insurance claims, and making financial decisions outside the trust's scope.

Advance Healthcare Directive (Living Will) Documents your wishes for medical treatment if you can't communicate—life support preferences, artificial nutrition, pain management. As a physician, you understand these decisions better than most. Document them clearly.

Healthcare Power of Attorney Names someone to make medical decisions on your behalf when you can't. This person advocates for your documented wishes and makes judgment calls the directive doesn't cover.

HIPAA Authorization Allows designated individuals to access your medical information. Without it, healthcare providers may refuse to share information with your family or agents—even in emergencies.

For physicians who relocate for training, fellowships, or career opportunities, keep in mind that powers of attorney and healthcare directives are state-specific documents. If you move across state lines, have an attorney review whether your documents remain valid or need updating.

How to Set Up a Revocable Living Trust

Creating a revocable trust involves drafting the document, signing it properly, then funding it (covered extensively in the next section).

DIY vs. Attorney: When Physicians Shouldn't DIY

Online trust services advertise convenience and low cost—often $100–$600. For a single person with simple assets and no children, a template might work.

For most physicians? The stakes are too high and the situations too nuanced.

Consider working with an estate planning attorney if you:

• Have children (especially minor children or children from prior relationships)
• Own a medical practice or have interests in a professional corporation
• Have assets in multiple states
• Have a net worth exceeding your state's small estate threshold
• Want specific provisions about how beneficiaries receive assets
• Have a blended family or potential inheritance disputes
• Own investment real estate
• Have significant retirement accounts requiring beneficiary coordination

Professional corporation ownership adds particular complexity. In states like California, Massachusetts, and Texas, transferring professional corporation shares to a revocable trust requires specific "savings clauses" and careful drafting to comply with regulations governing medical practice ownership. Generic templates don't include these provisions.

For most physicians, expect to pay $2,500–$7,500+ for a comprehensive estate plan including a revocable trust, pour-over will, financial power of attorney, and healthcare directives. Complex situations with business interests or tax planning can run higher.

Choosing a Successor Trustee

This decision deserves serious thought. Your successor trustee will manage potentially millions of dollars, make distribution decisions, file tax returns, and navigate family dynamics during an emotional time.

Family member as successor trustee:

• Knows your family and understands your wishes
• Typically no fees
• May lack financial sophistication, time, or emotional distance
• Can create family conflict if one sibling manages money for others

Professional trustee (bank trust department or trust company):

• Expertise in administration, investments, and tax filings
• Impartial decision-making
• Annual fees (typically 0.5%–1.5% of trust assets)
• Minimum asset thresholds (often $1M+)

Hybrid approach: Many physicians name a trusted family member as primary successor trustee, with authority to hire professional advisors using trust funds.

Whoever you name, have a real conversation with them. Ensure they understand the responsibility and know where documents are located.

Funding Your Trust: The Critical Step Most Skip

This is where most estate plans fail. Not in the drafting—in the execution.

A revocable trust only avoids probate for assets that are actually in the trust. Your trust document is worthless for accounts that were never retitled. Estate planning attorneys consistently report that incomplete funding is one of the most common problems they see—trusts signed but never fully funded, leaving families to navigate probate anyway.

"Funding" means transferring ownership of your assets to the trust—changing titles, updating account registrations, and ensuring the trust actually owns what you intend it to own.

What "Funding" Means in Practice

For each type of asset, funding looks different:

• Real estate: Recording a new deed transferring ownership to the trust
• Bank accounts: Updating the account title with your bank
• Brokerage accounts: Completing the institution's trust transfer paperwork
• Business interests: Assigning membership interests or shares (with appropriate restrictions)
• Personal property: Executing an assignment of personal property document

The Medallion Signature Guarantee Barrier

One of the most persistent bottlenecks in trust funding is the medallion signature guarantee requirement. Unlike a notary acknowledgment, which merely verifies your identity, a medallion guarantee is a warranty by a financial institution that the signature is genuine, the signer has legal capacity, and the signer has authority to bind the entity.

Each medallion stamp has a maximum transaction amount based on its "alpha prefix." Computershare's "Alpha Prefix Surety Coverage Limits" table lists common medallion coverage limits by alpha prefix—for example: E ($100,000), F ($100,000—most credit unions), D ($250,000), C ($500,000), B ($750,000), A ($1,000,000), X ($2,000,000), Y ($5,000,000), and Z ($10,000,000) (with a note that Z can be $14,000,000 for Security Transfer Association members). If your transfer value exceeds the stamp limit, the request can be rejected—one reason trust funding can take longer than expected.

A physician with a $2 million brokerage account can't simply walk into a local branch and get a stamp from a junior officer. A transfer of that size may require an X-level stamp or higher, which many retail branches simply don't have. You'll often need an appointment with a wealth management branch or private banking team. Some institutions require you to maintain a specific balance or tenure before issuing higher-level stamps.

Asset Funding Checklist

Table: What to Put in Your Trust vs. What to Keep Out

Retirement Accounts: A Critical Warning

The IRS views transferring ownership of a retirement account to a trust as a change in the account holder. The IRS treats this as a full distribution of the account balance, triggering immediate income tax on the entire amount.

For a mid-career physician with a $2 million IRA, retitling this asset to your trust would trigger immediate income tax on the entire balance—potentially creating a six-figure tax bill in a single year.

The trust should interact with retirement accounts only as a beneficiary upon death—and even then, naming a trust as IRA beneficiary creates complications (covered below in the retirement accounts section).

Putting a House in a Trust

Transferring real estate into a trust is one of the most valuable funding steps—and one that requires attention to several details.

High-Level Steps

1. Prepare a new deed transferring ownership from you individually to you as trustee of your trust
2. Record the deed with your county recorder's office
3. Notify your mortgage lender (required by most loan agreements)
4. Update your homeowners insurance to reflect trust ownership
5. Verify title insurance coverage remains intact

The Due-on-Sale Clause Question

Most mortgages contain a "due-on-sale" clause allowing the lender to accelerate the loan if title is transferred. For residential property, federal law provides protection.

The Garn-St. Germain Act (12 U.S.C. § 1701j-3) prohibits lenders from enforcing due-on-sale clauses for transfers into a revocable trust when:

• The property contains fewer than five dwelling units
• The borrower remains a beneficiary of the trust
• The transfer doesn't relate to a transfer of occupancy rights

For commercial properties (including a medical office building you own personally or larger multi-family properties), this protection may not apply. Consult with your attorney before transferring commercial real estate.

Insurance Coordination

Transferring your home to a trust can create insurance gaps if not handled properly:

• Homeowners insurance: The trust should be listed as an "Additional Insured" on your policy. Some insurers require specific endorsements. Contact your agent before or immediately after the transfer.
• Title insurance: A transfer to your trust may not automatically be covered by your existing owner's title insurance policy. Some title companies have denied claims on the grounds that the trust is a "voluntary transferee" not covered by the original policy. Ask your title company about obtaining an endorsement (such as a CLTA 107.9 in California) that explicitly adds the trust as an insured party.
• Umbrella liability: Ensure your umbrella policy covers the trust as an insured party, not just you individually.

What Happens at Incapacity and at Death

During Incapacity

If you become incapacitated, your successor trustee steps in to manage trust assets without court involvement. This includes:

• Paying bills and ongoing expenses
• Managing investments
• Handling real estate
• Making distributions for your care

This seamless transition is one of the primary benefits of a revocable trust—your family avoids the expense and delay of a court-supervised conservatorship for trust assets.

For assets outside the trust, you'll still need a durable power of attorney to authorize someone to act on your behalf.

At Death

When you die, the revocable trust becomes irrevocable. Your successor trustee takes over with significant responsibilities:

Immediate tasks:

• Obtain death certificates
• Secure trust assets
• Notify beneficiaries
• Notify financial institutions

Administrative duties:

• Obtain a new Tax ID (EIN) for the trust—it's now a separate taxpayer
• File the decedent's final personal income tax return
• File Form 1041 (trust income tax return) for any income earned after death
• Obtain date-of-death appraisals for real estate and investments (establishes stepped-up basis)
• Pay debts and expenses
• File "Notice to Creditors" if required by state law
• Distribute assets according to trust terms

A Warning About Trustee Liability

Serving as successor trustee carries real personal liability risk that most family members don't anticipate.

In practical terms: if your successor trustee distributes trust assets to your children, and the IRS later audits a prior year's return and assesses a deficiency, the trustee can be sued personally if the trust no longer has sufficient funds to pay the tax debt. This liability exists even if the trustee didn't personally benefit from the distribution.

Family members stepping into this role should:

• Work with a CPA to ensure all tax obligations are identified and reserved for
• Consider obtaining a tax closing letter from the IRS before making final distributions
• Consult with an estate administration attorney about potential liability exposure
• Not rush distributions—waiting periods exist for good reason

Costs and Maintenance

Setup Costs (2025 Estimates)

Costs vary significantly by region, attorney experience, and estate complexity. These ranges reflect typical fees reported across major markets:

Additional costs to budget for:

• Deed recording fees: $50–$200+ per property
• Trust certification/notarization: $25–$100
• Account transfer fees: Usually none, but some institutions charge nominal fees

Ongoing Maintenance

A revocable trust isn't "set and forget." Plan on:

• Reviewing every 3–5 years or after major life changes
• Updating funding as you acquire new assets
• Amendment costs if changes needed: $300–$1,000 for simple amendments

Corporate Trustee Fees

If you name a professional trustee (bank or trust company), expect ongoing fees:

Long-term impact: For a $5 million trust with a corporate trustee charging 1% annually, that's $50,000 per year—$1 million over 20 years. This "fee drag" often exceeds even expensive probate costs. Weigh the benefits of professional management against the long-term cost.

Revocable vs. Irrevocable Trusts

The fundamental difference: control.

Simple Decision Framework for Physicians

A revocable trust is appropriate when:

• Your primary goals are probate avoidance, privacy, and incapacity planning
• You want to maintain full control over your assets
• Your estate is below estate tax thresholds
• Asset protection is addressed through other means (insurance, exemptions)

An irrevocable trust may be appropriate when:

• You have significant estate tax exposure
• Asset protection is a priority and you're willing to give up control
• You're doing Medicaid planning
• You have specific wealth transfer goals that require removing assets from your estate

For most physicians, a revocable trust handles core estate planning needs. Irrevocable structures become relevant at higher net worth levels or for specific planning objectives. Consult with an estate planning attorney about which combination makes sense for your situation.

Retirement Accounts and Trust Beneficiaries

Naming a trust as beneficiary of retirement accounts (IRAs, 401(k)s) creates complications that most physicians don't anticipate.

The 10-Year Rule

The SECURE Act eliminated the "stretch IRA" for most non-spouse beneficiaries. Under current rules, most designated beneficiaries must withdraw the entire inherited IRA within 10 years of the owner's death. For details, see IRS Publication 590-B.

Exceptions exist for "eligible designated beneficiaries":

• Surviving spouses
• Minor children (until they reach majority)
• Disabled or chronically ill individuals
• Beneficiaries not more than 10 years younger than the deceased

The Trust Beneficiary Problem

When a trust is named as IRA beneficiary, the tax treatment depends on how the trust is structured:

"Conduit" trusts require all IRA distributions received by the trustee to be immediately distributed to beneficiaries. With the 10-year rule, this forces massive income recognition over a short period—potentially during beneficiaries' peak earning years.

The Conservative Recommendation

For most physicians, naming adult children directly as IRA beneficiaries—rather than naming a trust—results in better tax outcomes. The children pay tax at their individual rates, which are almost certainly lower than compressed trust rates.

Consider naming a trust as IRA beneficiary only when:

• Beneficiaries have spending problems, creditor issues, or special needs
• You want to protect the inheritance from a beneficiary's divorce
• Beneficiaries are minors and you want trustee oversight

In these cases, work with an estate planning attorney experienced in retirement account planning to structure the trust properly. Generic trust provisions often create unintended tax consequences.

FAQs

Do I still need a will if I have a revocable trust?

Yes. A "pour-over will" catches any assets not transferred to your trust and directs them into the trust. It also names guardians for minor children—something only a will can do.

Does a revocable trust avoid probate in every state?

A properly funded revocable trust avoids probate for the assets it holds, regardless of state. However, any assets outside the trust (accounts never retitled, assets acquired after the trust was created) will still go through probate. Complete funding is essential.

How long does it take to set up a revocable trust?

The document drafting typically takes 2–4 weeks with an attorney, though timelines vary by complexity. Funding—the critical part—can take several months depending on the complexity of your assets and how responsive financial institutions are.

Can I change my revocable trust after it's created?

Yes. You can amend or revoke it entirely at any time while you're alive and competent. Most attorneys recommend a full review every 3–5 years or after major life events.

At what net worth does a revocable trust make sense?

There's no universal threshold. In high-probate-cost states like California and Florida, trusts often make financial sense at relatively modest net worth levels due to the probate fee savings. In states with streamlined probate (like Texas), the decision depends more on privacy preferences, multi-state property, and incapacity planning goals.

As a rough guide: if you own real estate, have more than $500,000 in probate-eligible assets, or value privacy, a revocable trust deserves serious consideration. If you have assets in multiple states, a trust is nearly always worthwhile.

Will a revocable trust protect my assets from malpractice claims?

No. A revocable trust provides zero asset protection from creditors or malpractice judgments during your lifetime. Asset protection requires different strategies (appropriate insurance coverage, state exemptions, potentially irrevocable trust structures).

Does my spouse need a separate trust?

It depends. Many married couples use a single joint revocable trust. Others prefer separate trusts for various reasons (second marriages, separate property, specific tax planning). Your estate planning attorney can advise on which structure fits your situation.

The Bottom Line

A revocable living trust is a valuable estate planning tool for many physicians—particularly those in high-probate-cost states, with multi-state property, or who prioritize privacy and seamless incapacity planning.

But the trust document itself is just the beginning. The real work—and the place where most plans fail—is in the funding. Every account that isn't properly retitled, every property that isn't deeded correctly, and every beneficiary designation that isn't coordinated is a potential probate proceeding waiting to happen.