A lot of people are somewhat familiar with what a last will and testament is, but may not be as familiar with what a trust is in regards to estate planning tools. Many people tend to thing wills and trusts are somewhat interchangeable, but the truth is that they both serve separate purposes. An estate planning attorney can discuss with you if your family would benefit from either of these tools. The following is a brief overview of how each work.
Last Will and Testament
A will is a document that a person stipulates how they want their property to be divided once they have died. The person who writes the will, referred to as the grantor decides who the beneficiaries will be and what they will receive.
A trust is a legal arrangement whereby the trustor (the person who sets up the trust) places assets and/or property in the trust and chooses a beneficiary who will receive the contents of the trust when the trustor passes away. The trustor will choose a trustee who will hold the assets in the trust on behalf of the beneficiary. In the majority of trusts, the trustor chooses themselves as the trustee. When the trust that is set up is a revocable trust, the trustor can change or dissolve the trust at any time.
Differences between Wills and Trusts
One of the biggest difference between a will and a trust is that a will is only executed when the person who wrote it dies. On the other hand, a trust can go into effect immediately.
Another difference is that assets that are passed to a beneficiary by contract, such as joint tenancy with rights of survivorship or life insurance policies, can be distributed through the trust since the trustor can place any property or assets in the trust that they choose. These types of contract assets cannot be handled through a will.
A significant difference between wills and trusts – and the one factor that often attracts people to trusts – is that wills are require to go through the probate process but trusts are not. Probate is the legal process in which the court declares whether a will is valid or not. The decedent names an executor in the will, the person who will oversee the probate process and distribution of all the assets, as well as pay any debts and other obligations the decedent had. Trusts are not required to go through the probate process.
Probate can take approximately 12 months, as long as no one contests the will. If someone who was not named in the will or believes the will is not valid, they can contest it. This often slows down the probate process, causing it to go longer than 12 months.
The court will decide whether or not the will is valid or if the party contesting the will has a valid claim. It is not uncommon for people to be successful in contesting wills and whatever the decedent’s wishes in the contested will were, will not be honored. A lawyer, like the Philadelphia, PA revocable living trust lawyers residents can turn to, can provide any answers and questions to personal circumstances.
Thank you to Klenk Law for providing their insight and authoring this piece on the differences between a trust and a will.