When you think of a will and a trust, you may not even think to compare the two. A will is probably the most well-known estate planning tool and trusts remain unknown. After all, if you have a will in place to direct how you want your assets distributed after you die, why would you need a trust? The truth is, however, that trusts have many uses and many benefits which vary based on the type of trust selected and how it is utilized. A living trust, for instance, may accomplish the same goal of a will in setting forth how a person’s assets are distributed upon their death, but a will and a living trust are two distinct estate planning tools. What are the differences between the two and why do these differences matter?
Will Versus Living Trust
A last will and testament, more commonly referred to as simply a “will,” is a legal document which sets forth a person’s assets and designates who should be the beneficiary of said assets upon the person’s death. The person creating the will is known as the “testator.” A will can be as general or specific as the testator desired. Of course, a stronger will is one in which instructions for asset distributions are detailed as much as possible. While created during the lifetime of the testator, a will does not really take legal effect until the testator dies. Upon the testator’s death, the will is probated.
A living trust, conversely, takes effect as soon as it is created by the trustor or grantor. The grantor of the trust is the creator of the trust. Upon creating a living trust, a trustee must be appointed and the trustor often stands in this role for his or her lifetime and names a successor trustee to take over upon his or her death. A living trust must be funded to be effective and, in order to fund a trust, assets you wish to hold in the trust must be properly transferred to the trust. This involves transferring ownership of the assets to the trust. So, in order to use a living trust in lieu of a will for the purpose of distributing assets upon your death, any asset you wish to see distributed to a certain individual via your trust must be transferred into the trust.
One of the central differences between a will and a living trust is the fact that a will goes through probate. A living trust, on the other hand, does not. Assets held in a living trust will pass outside of probate to the beneficiaries of the trust according to the terms set forth in the governing trust document. This difference highlights a big benefit of using a living trust over a will for purposes of distributing your assets to your intended beneficiaries after you die. Avoiding probate means saving your beneficiaries time, money, and frustration. Furthermore, your bequests become private. Those assets that pass through probate are all reflected in a record accessible by the general public.
Estate Planning Attorney
Are you interested in learning more about your estate planning options? Do not hesitate to reach out to Verras Law for assistance. Contact Verras Law today.