Finding an estate planning attorney you can trust to create an estate plan can help you stay in control over what happens to your assets after you pass on. One doesn’t have to be wealthy to have an estate plan. Even if you are of modest means, you have an estate and should have an estate plan. Estate planning gives the people you love a roadmap to follow to ensure your assets are handled according to your intentions. Both will and trust are legal arrangements that help protect assets and direct their transfer or disposition following the owner’s wishes. This article compares the differences and similarities between a will and a trust, and which one is the right option to fit your needs.
Finding an estate planning attorney you can trust to create an estate plan can help you stay in control over what happens to your assets after you pass on. One doesn’t have to be wealthy to have an estate plan. Even if you are of modest means, you have an estate and should have an estate plan. Estate planning gives the people you love a roadmap to follow to ensure your assets are handled according to your intentions. Both will and trust are legal arrangements that help protect assets and direct their transfer or disposition following the owner’s wishes. This article compares the differences and similarities between a will and a trust, and which one is the right option to fit your needs.
What is a Will?
A will is a document that stipulates who should get your assets after you pass on or become incapacitated. When establishing a will, the creator of the will (also known as the testator) has to be of legal age and should have the mental capacity to do so. The creator nominates an executor, also known as executrix, to handle estate issues upon the demise of the testator. Estate distribution can include guardianship of minor children, care of your pets, doling property and assets out to beneficiaries, implementing funeral arrangements, and more. Your will can direct any asset that is held in a single name. Assets that are owned jointly will transfer immediately to the surviving co-owner. While each state has its own rules for wills, most require that a written will is signed or executed by the testator and two witnesses for it to become legally binding and effective.
As state law requires, a will must be signed and witnessed, and its implementation must go through a legal process. A will must be filed with the probate court in your jurisdiction and carried out by the designated executor. Wills are publicly available in the records of the probate courts, which oversee its execution and have jurisdiction over any disputes.
What is a Trust?
A trust is a legal tool that protects assets, directs their use, and transfers per intentions of the owners, also called the grantors or trustors, to the trustees. The trustor can designate a successor or a trustee to oversee the trust if the trustor dies or becomes incapacitated. Trusts set the terms for the trustee’s management, distribution, and disposition of the assets to the designated beneficiaries. Establishing a trust creates a legal entity wherein the grantor can hold assets. Trusts are often used in estate planning for the benefit of the grantors’ heirs.
Trusts give grantors more control over asset distribution and, unlike wills which take into effect after death, become effective upon the transfer of assets. A living trust can be created during a grantor’s lifetime, and a testamentary trust can also be made after death based on the directives of the decedent grantor’s will. Unlike wills which take effect upon death, trusts become effective upon the transfer of assets.
Key Differences Between Wills & Trusts
A key difference between a will and a trust is that a property or an asset subject to a will must go through the probate process, while a property or an asset owned by a trust avoids the tedious and cumbersome probate process upon the trustor’s demise. Find below a list of things that differentiates a will from a trust:
- Unlike a will, a living trust can keep your assets out of probate proceedings.
- A will name an executor to manage the assets of the probate estate only until probate closes.
- Trustees can manage the assets that are in the trusts forever.
- Wills are less expensive but more complex to maintain.
- You can designate guardianship for minor children in a will.
- Trust becomes effective the moment you sign and fund it.
- Wills will only be effective when you pass on.
- In a trust, information about your estate stays private.
- In probate, information about your estate is made public.
- Having a trust, your estate will not have to pay a probate attorney or court fees in response to your death.
What’s Right for You: Will or Trust?
The right strategy depends on your circumstances and you have to understand the role a will and a trust will serve in your estate. Most estate plans have both one or more trusts and a will. You have a choice to own most assets in your name and determine their distribution through your will. The other option is to have a living trust own most of your assets and have the terms of the trust agreement lay down how your assets will be distributed.
A trust can have limited terms and duration of the grantor’s or another person’s lifetime. It can hold and distribute assets after the grantor’s or other person’s death. If you pass on without a will in place and made no other estate planning arrangements, your assets’ distribution will be solely determined by state law.
Hire Estate Planning Pros in Orange County
Wills and trusts can be utilized on their own or together as part of a more estate plan. Our estate planning attorneys specialize in providing customized estate planning solutions to fit your specific needs. To schedule your free no-obligation consultation, contact us today!
