If you wish to protect the interests of your loved ones, it is crucial to know the difference between a Will and a Trust. Although there are several different types of Trusts, we will only be discussing a Living Revocable Trust in this article. Essentially, the main difference between the two is when they can be used. A Will is not effective until after you pass away and the person appointed in the Will is appointed by the Court to distribute your assets in accordance with the terms in the Will. A Trust becomes effective as soon as it is properly signed and funded with an asset. With a Trust, you are in charge of all assets held in the Trust while you are alive and have capacity.
Our estate planning team believes it is important for clients to have both a Will and a Trust.
Why it is Important to Have a Trust
As stated, there are many different kinds of Trusts. A Living Revocable Trust is the appropriate type for most people, and the easiest way to explain it is in the name itself.
- Revocable: Everything stated in the Trust can be changed whenever you choose as long as you have capacity. It is a legally binding document that changes as your life changes. The Trust only becomes irrevocable upon your death or incapacity.
- Living: The Trust is valid during your lifetime.
- Trust: After the Trust is validly signed, you will transfer your assets into the Trust. While your bigger assets, such as a house, should be owned by your trust, you likely have other smaller keepsakes and valuables, such as jewelry or family heirlooms, that you will want to give to a specific person. These items can be distributed through the Trust by referencing that a tangible personal property written memorandum will be signed.
You are the appointed Trustee, and if you are married, your spouse is generally a Co-Trustee, which means you will dictate what happens with the use and management of the assets transferred into the Trust during your lifetime. When you become incapacitated or die, you appoint a person as the successor Trustee and they can step in and control your affairs precisely as you laid out in the document and managed during your lifetime. A successor Trustee will take over without the need to obtain court approval.
For those who value their privacy, a Trust is also private. It does not have to be filed with the Court, which means only beneficiaries and Successor Trustees can know the contents of it. Having a Trust that is well-managed and funded is the surest way for a successor Trustee to take over its management immediately after your passing or incapacity without court approval. A Trust truly is a kind gesture for your loved ones because it prevents them from added stress during an extremely emotional and traumatic time by searching for and gaining access to assets and having to petition the court for approval to do so.
Why it is Important to Have a Will
Even if you have a Trust, you should also have a Will. In the event you did not transfer an asset into the Trust, the Will can state that whatever is not held in the Trust shall be transferred into the Trust and distributed according to the terms of the Trust. Think of it as a backup and whatever you may not have transferred into the Trust can be done so through the Will.
If you have children, it is imperative to have a Will since this crucial legal document also allows you to appoint a guardian for dependent minors. Our children are our most prized assets and, while most people think a Will distributes property, money, or personal property, they often do not realize that, without a Will or another living parent, the Court will dictate who your children’s guardians are. We understand that it can be upsetting to think about this, but it is more upsetting when parents die without a Will, letting the decisions regarding their children’s care fall upon the legal system. More likely than not, a relative might serve as your children’s guardian, but only after a lengthy and emotionally taxing court process.
Why it is Important to Include Both in Your Estate Plan
If you only have a Will when you pass away, your family will likely have to go through the probate process, which is often lengthy, expensive, and public. Moreover, you will likely need to hire an attorney. When you die with only a Will, that document must be filed with the court and can be accessed by anyone.
Contact Our Knowledgeable Estate Planning Team to Get Started!
The love you have for your family is easily displayed throughout your life, but having a Will and Trust will ensure that your love lives on in the most profound way. It will help the ones you love avoid unnecessary stress, heartache, and expenses. If you were to pass away without providing explicit directions regarding how you want your assets to be handled or who will care for your children, it will surely cause disharmony, distress, and family rifts, and that is not how you want to be remembered.
Contact our law office today at (206) 203-8802 to ensure your loved ones are taken care of properly.