People create wills and trusts to protect their assets and help ensure loved ones are taken care of after their passing or under other circumstances. These legal documents are similar in many ways. Ultimately, they both determine how assets are distributed to family members. However, considerable differences exist between the two, such as whether or not they go through probate and when they go into effect.
What Is a Will?
A will indicates how you want your assets divided when you die and who they will go to. You can also include information regarding how surviving family members should handle your remains, such as choosing burial or cremation. Possessions will only go to the people named in the will, such as a spouse, child, or friend, a process that’s typically facilitated by the executor of the estate named in the will. Additionally, you can appoint someone to take care of your minor children.
If you have a will, your surviving heirs will have to go through probate court to receive your assets. A judge will review the will to determine its validity and approve the distribution of assets to the named beneficiaries. The probate process can take weeks, months, or sometimes even years if the estate is particularly complex or the will is disputed.
What Is a Trust?
With a living trust, you can also specify how your assets will be distributed to beneficiaries. However, unlike a will, which goes into effect upon a person’s death, a living trust goes into effect as soon it’s created, and you can transfer assets into it immediately.
Usually, the person who creates the living trust manages it until their death or until they become incapacitated, at which point the trust is passed to a designated successor trustee, who becomes responsible for managing and distributing your assets according to your wishes.
Also unlike a will, a trust doesn’t need to go through the probate process. The trustee has the authority to transfer property to the beneficiaries immediately upon your death or as specified in the trust.
Pros and Cons of Wills and Living Trusts
There are a number of considerations you need to take into account when deciding whether you need a will, or a trust, or both. If your estate is not large or complex, a will may be all you need, and, in some states, smaller estates are able to take advantage of simplified probate processes.
If your estate is vast or complex, a trust may enable your heirs to skip a costly and lengthy probate process and also provide other financial benefits. For example, a trust may be used to help shield beneficiaries from certain taxes.
In addition, if a beneficiary is a minor who is too young to own property, the trustee can handle the property held in the living trust until the child reaches the age specified in the legal document. If you wish to leave behind property to a minor in a will, you will have to specify the person you want to manage the property until the child can take ownership.
One potential drawback of a living trust is that you may not be able to appoint a guardian for minor children in it. Depending on the laws in place in your state, you may need to specify guardianship in a will if you want to ensure a trusted family member or friend will care for your children after you die.
There are advantages and disadvantages to living trusts and wills. It is possible to create both, but it’s critical to understand the differences and what’s best for your own circumstances. You should contact a qualified estate lawyer to help you draft the necessary legal documents to protect your assets and family. If you need assistance getting started, we invite you to contact our Brandon will and trust law firm at (813) 438-8503 to schedule a consultation.