Experienced estate planning attorney Doug Lauenstein discusses some of the main differences between a Will and a Trust.
The terms “Will” and “Trust” can seem interchangeable at times but in reality, they serve different purposes that can be useful tools for estate planning. When both are used properly, they can work together to create a complete estate plan.
First and foremost, a Will is defined as a document that identifies who receives your property after your death. A Will also requires a legal representative to ensure that the Will gets distributed the way that you wanted after your death. A Trust is similar but defined as a legal arrangement where a Trustee holds legal title to property for a beneficiary. The following are more differences that distinguish a Will from a Trust:
- The first difference between Wills and Trusts is the timing that they go into effect. Wills only go into effect after your death. Trusts on the other hand, take effect either before or after your death depending on the type of Trust.
- The next difference between these two terms is that a Will directs who will receive your property at death and appoints a legal representative called the Personal Representative to carry out your wishes. A Trust can be used to begin distributing property before or after death depending on the terms of the Trust. The Trustee directs who will receive the property and the timing of the distribution.
- Another difference between a Will and a Trust is what they cover. A Will covers property that is in your name when you die without a beneficiary or joint owner. While a Trust can cover property that has been added to your Trust either before or after your death. A Trust can be part of your Will and funded after you die, this is called a Testamentary Trust. While a Trust funded before you die is sometimes called a Living Trust or Inter Vivos Trust.
- The last main difference is how they are distributed. Wills are overseen by a court administration to ensure that the Will is valid and is distributed properly. A Trust does not require court administration and can be distributed by the Trustee.
Both of these tools have their advantages and disadvantages, so being aware of the differences between wills and trusts can help you save time and money. For more information regarding Wills and Trusts, contact experienced estate planning attorney, Doug Lauenstein, today.