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What Is the Difference Between a Trust and a Will?

Posted on in Estate Planning

Lombard estate planning attorneyMost people are vaguely familiar with the concept of a last will and testament. However, there are actually many different documents that individuals use to distribute their assets and property upon their death. Wills and trusts sometimes get lumped together, but they serve different purposes. You may choose to use one, both, or neither based on your own personal circumstances and wishes.

A will is a document in which a person—the grantor—dictates what they want to happen to their property after they have passed away. He or she designates beneficiaries who then receive the assets and property upon the grantor’s death. A trust, by comparison, is a legal arrangement which allows a third party, called the trustee, to hold assets on behalf of a beneficiary or beneficiaries.

One significant difference between a will and a trust is that a will goes into effect only after the person who authored it, passes away whereas a trust can be effective immediately. Also, a will can only govern the distribution of property owned in the testator's sole name. Assets that pass directly to a beneficiary by contract or law, such as life insurance policies or joint tenancies with rights of survivorship, cannot be addressed by a will. Trusts, on the other hand, can manage and distribute any property the grantor chooses. Trusts can include life insurance policies and tenancy-in-common interests.

Avoiding Probate with a Trust

Another difference between trusts and wills is that wills require probate, the judicial process in which a will is proven to be legally acceptable and accurate in court. A probate court decides the legal validity of a testator's will and grants approval, also known as granting probate, to the executor who acts on behalf of the deceased. Trusts avoid this often lengthy step.

Sometimes during the probate process, a will is contested. If a person believes a will to be inconsistent with the deceased’s wishes or believes that it was created under fraudulent conditions, he or she may be able to contest it. This can slow down the process of property and asset distribution to beneficiaries. Furthermore, because wills are substantiated in court during probate, the content of the wills become public record. A trust provides significantly more privacy than a will does. In some cases, a trust can replace a will but more often the two documents are used in conjunction as to prevent any oversights.

Call Us for Help

If you wish to set up a trust or create a will, contact an experienced Lombard estate planning attorney today and get the guidance you need. Call 630-426-0196 for a confidential consultation at A. Traub & Associates.

 

Sources:

https://www.forbes.com/sites/nextavenue/2017/04/07/probate-wills-executors-your-estate-planning-questions-answered/

http://money.cnn.com/retirement/guide/estateplanning_trusts.moneymag/index.htm

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