Estate planning is a critical process that every individual should undertake to ensure their assets are distributed according to their wishes upon their death or incapacity. One of the primary ways to achieve this is through the creation of either a will or a trust. While both a will and a trust serve similar purposes, there are significant differences between the two.
Check out our podcast with Jason Morris of Woodburn and Wedge discussing the difference between a will and a trust → https://youtu.be/ZxbCd1iuBd0?t=241
A will is a legal document that outlines how an individual's assets should be distributed after their death. It becomes effective only after the death of the testator, (the person who has died and has left the will), and the probate court must approve it. Probate is a court-supervised process that verifies the validity of the will and ensures that the assets are distributed according to the wishes of the testator. The probate process can be time-consuming, costly, and may involve public scrutiny. Additionally, a will only becomes effective after the death of the testator, which means that it offers no protection in the event of the testator's incapacity.
On the other hand, a trust is a legal arrangement where the assets of an individual are transferred to a trustee, who manages them on behalf of the beneficiaries. The trust can be created during the lifetime of the individual, and they can also serve as the trustee. In such cases, the individual retains control over their assets and can amend or revoke the trust at any time. In the event of the individual's death or incapacity, the successor trustee takes over the management of the trust, and the assets are distributed according to the provisions of the trust. Unlike a will, a trust does not have to go through probate, which means that it is a more private and cost-effective way of transferring assets.
Another advantage of a trust is that it provides a level of disability planning that could avoid the need for guardianship. In the event that the individual becomes incapacitated, the successor trustee can take over the management of the trust and ensure that the individual's wishes are respected. This can be particularly important if the individual has specific requirements that need to be met.
In conclusion, both a will and a trust are important estate planning tools that can help ensure that an individual's assets are distributed according to their wishes. However, trusts offer several advantages over wills, including the ability to avoid probate, maintain privacy, and provide disability planning. It is important to consult with an experienced estate planning attorney to determine which option is best for your individual circumstances.
We want to thank Sharon M. Jannuzzi and Jason Morris of Woodburn and Wedge Estate Planning, Probate and Tax Practice Group for contributing to this blog and our video podcast.
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