Wills vs Trusts: What are the Differences?
To Trust or Not to Trust
What is the difference between a Will and Trust?
A will is a written document that expresses a decedent’s final wishes. These wishes can be anything from naming a guardian for their young children to the giving of a specific item or gift to a specific person. A will is only used upon that person’s death whereas a trust is active from the day you create it. All wills must go through probate where it is reviewed to determine whether it is valid and authentic. When a person dies without a will, probate court has the authority to distribute a person’s assets.
A trust is a legal document that is created during a person’s lifetime. It is a right to money or property that is held in a fiduciary or trustee relationship by a person or a bank for the benefit of another. The trustee is the person who holds title to the assets that are in the trust and the beneficiary is the person who will receive the benefits from the trust.
There are different types of trusts but the most common are:
Revocable Trust
A Revocable Trust is a trust that is created during a person’s lifetime and can be altered, changed, modified or revoked in its entirety at any time. Revocable trusts are helpful in avoiding probate because if ownership of a person’s assets are transferred to a revocable trust during their lifetime, upon their death the assets are not subject to probate. However, a revocable trust is still available to a person’s creditors. Typically, a revocable trust evolves into an irrevocable trust upon the death of the trust-maker.
Irrevocable Trust
An Irrevocable Trust is a trust that cannot be altered, changed, modified or revoked after it is created. The trust-maker is able to add assets but once they are put into trust the trust-maker does not have access to or control over the assets. The most common Irrevocable Trust is created to protect assets in the event the trust-maker goes into a nursing home.
Special Needs Trust
Special Needs Trust is a trust that is set up for a person who receives benefits from the government in order for them not to lose those benefits. Under this type of trust the disabled beneficiary can not control the amount or frequency of trust distributions and can not revoke the trust at any time and usually there is a provision in the trust that terminates the trust in the event that it could be used to make the beneficiary ineligible for any government benefits.
When it comes to Estate Planning it is important to consult with an experienced attorney. The attorneys and paralegals at TRAINOR LAW PLLC are here to answer any questions or concerns that you may have and will be here every step of the way to guide you through the process.
This article is intended to be educational and is not intended to be legal advice, which can only be given after an attorney-client relationship is established.
