Will vs. Trust: What’s the Difference?

A last will and testament and a revocable living trust are two of the most common testamentary documents in estate planning. Your unique situation and wishes will determine which option is best for you. This article is designed to outline the key differences between a will and a living trust.

What control do I have in distributing my estate with a will or a trust?

A will is limited to identifying who you want to receive your property when you pass away.  You cannot control how the property is then used or place any conditions on these distributions.  While a will offers limited control over your distributions, you can also use a will to nominate a guardian for minor children and leave instructions for your final arrangements.

On the other hand, a trust allows you to make conditional distributions even after you pass away.  The language of the trust can include specific language about how you intend the distributions to be made. Your trust will appoint a trustee that will manage all trust property and make distributions based on the trust provisions.

When does a will or a trust take effect?

 A will does not go into effect until after you pass away. On the other hand, a trust is effective during your lifetime and after you pass away. A trust can be used to manage and distribute assets during your lifetime, immediately after death, or sometime in the future.  Also, a trust can be set up to take care of your needs during periods of incapacity.  A will alone does not provide anyone authority to manage your property should you become incapacitated.

Can I avoid probate with a will or trust?

All wills will be subject to the public, time consuming, and often costly court process of probate administration. The purpose of probate is to validate the will and distribute assets per the terms of the will. The probate process also allows creditors to recover from your estate before your intended heirs are allowed to recover.

Perhaps the most beneficial part of having a trust is the ability to bypass the probate process.  The trustee named in the trust will distribute your property per the trust provisions and without the supervision of a judge. This also keeps your assets and distributions private and out of public records. Trusts are an effective way to avoid the additional time and expense of probate administration while also protecting your intended heirs’ share of your estate from creditors.

Do I need to fund a will or a trust?

A properly drafted will does not need to be funded.  The assets listed in the will are validated through the probate process.  A trust however must be funded by titling assets into the trust for the trust document to have effect over the assets.  The grantor of the trust is able to place assets in and out of the trust as they wish during their lifetime. Assets outside of the trust at the time of the grantor’s death will be part of the grantor’s probate estate. An attorney can give you specific funding instructions to ensure that your trust meets your planning objectives.

In conclusion, a will is a basic estate planning document that can identify intended heirs, name a guardian for minor children, and state final arrangement instructions.  The downside of only having a will is that your estate will be subject to time consuming and costly probate proceedings.  Further, probate proceedings are public information so your final estate, debts, and intended beneficiaries will be available for anyone in the public to access.  A trust is a more complex document that comes with the added benefit of more control over your assets and can provide for you during periods of incapacity.  Further, a properly funded trust will avoid the probate process.  If you have any questions about your estate plan or setting up an estate plan, please call me at 800-841-0065 or email me at dakota@warnerlawfirmpllc.com.