How does a Trust differ from a Will in Estate Planning?
Definition
-Will: A legal document that outlines how a person’s assets and affairs will be handled after their death. It only takes effect upon death and is subject to probate.
-Trust: A legal arrangement where a trustee holds and manages assets on behalf of beneficiaries. Trusts can take effect during a person’s lifetime or after their death. There are many times of trusts such as Living of Revocable Trusts, Irrevocable Trusts, and Special Needs Trusts.
Probate Process
-Will: Generally, must go through probate, a court process that validates the will and oversees the distribution of assets. This can be time consuming and public. We help clients who desire a will-based estate plan to discuss their options and set up a plan to avoid probate, where possible.
-Trust: Generally, avoids probate, allowing for quicker and private distribution of assets to beneficiaries. This can help maintain confidentiality and reduce delays.
Effective Date
-Will: Takes effect only after the individual’s death.
-Trust: Can be established during a person’s lifetime (living trust) and can manage assets while the person is still alive, providing flexibility and control.
Control and Management
-Will: Provides instructions on how assets should be distributed but does not manage assets during the testator’s lifetime.
-Trust: Allows for ongoing management of assets. The trustee can manage investments, pay bills, and distribute funds according to the terms of the trust.
Flexibility
-Will: Offers limited flexibility. Once it is executed, it can only be changed through a formal amendment or a new Will.
-Trust: More flexible in terms of management and distribution. Trusts can include specific instructions on how and when beneficiaries receive their inheritance, such as staggered distributions or conditional distributions.
Privacy
-Will: Becomes a public document once it enters probate, making its contents accessible to anyone.
-Trust: Remains private, protecting the details of asset distribution from public scrutiny.
Guardianship for Minors
Will: Can designate guardians for minor children, ensuring that the testator’s wishes are honored regarding their care.
Trust: Can also provide for the care and management of assets for minors, specifying how and when they receive their inheritance.
Conclusion
Both trusts and wills play vital roles in estate planning, and the choice between them often depends on individual circumstances, goals, and preferences. Many people choose to use both tools in tandem to create a comprehensive estate plan that addresses their unique needs. Schedule a consultation with Hicks & Spector LLC to discuss the best approach for your situation.
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Content contained on this site is for informational purposes only and should not be considered legal advice. You should consult an attorney of your choosing to discuss your particular case and to obtain legal advice specific to your situation.
