By Melissa G. Nolan The following was originally posted on Patch.com by Melissa G. Nolan as part of a weekly series written by the attorneys of Paule, Camazine and Blumenthal, P.C. called From the Lawyer’s Desk. If you have any areas of the law that you would like discussed as part of that series, please contact us at firstname.lastname@example.org.Both a will and a trust exist to carry out your wishes after death. However, they are not interchangeable, and depending on your situation, one or both may be needed to ensure your wishes are carried out.
A will is a common way to ensure your assets are distributed according to your wishes following your death. A will is a written document, signed and witnessed, that specifies what will happen to your property (and your minor children, if applicable) upon your death. Wills can be changed or revoked at any time, for any reason. Setting up a will is usually inexpensive and simpler than creating a trust. Also, when property is distributed through a will, creditors have only a limited window of time to bring claims against your estate.
However, even though a will exists specifying how property is to be distributed, your estate must still go through probate, where the distribution will be implemented and becomes a matter of public record. Probate is a court system designed to wrap up a person’s affairs after they die, and it is often slow and costly. Also, since minor children cannot own property, any property left to children in a will requires the appointment of an adult to manage it until the children reach 18. Also problematic is that the day the child turns 18, he or she will gain control over the property. Unfortunately, most 18 year olds are not equipped to handle any significant sum of money. Wills only take effect upon death, so further legal action is required to specify what will happen in the event of incapacity or disability.
A revocable living trust, on the other hand, is a form of property management that begins during your lifetime and continues after your death. When you create a trust, you are the trustee or manager of the funds or property in the trust. A successor trustee is identified to carry out the distribution of the property in the trust following your incapacity or death. Creating a trust allows your successor trustee to seamlessly take over management of your assets upon your incapacity, and allows your assets to be distributed upon your death without probate. By avoiding probate court involvement during your lifetime in the event of your incapacity, and upon your death, you and your heirs save time and money, and your financial matters are kept out of public record. You can put as few or as many assets in the trust as you like. Placing property in the trust is called “funding the trust.” If it is a revocable trust, the trust can be changed at any time.
The potential downside of creating a trust is that it may be more expensive and complicated at the outset than the formation of a will. In order to fund a trust, you must transfer ownership of all property you intend to place in the trust, which will probably include reversing title documents. It can also be slightly complicated to refinance any property owned by your living trust. However, any additional expense and complication which you spend setting up and funding a trust is expense and complication that you have saved your heirs following your incapacity or death.
Most people need a will, but whether or not a trust is ideal depends on factors such as the size of your wealth, whether or not you are married, whether not you have children, etc. When considering creating a will and/or a trust, consult an attorney to make sure that your wishes are carried out quickly and without hassle for your loved ones.