Confused about the differences between wills vs trusts? If so, you are not alone. While it is always wise to contact experts like us, it is also essential to understand the basics. Here is a quick and simple reference guide:
A revocable living trust allows you to name your spouse, partner, child, or other trusted person to manage your money and property, appropriately transferred to the trust, should you become unable to manage your affairs. A will only becomes effective when you die, so a will is useless in avoiding conservatorship and guardianship proceedings during your life.
The Trustee does not need to put accounts and property in a revocable living trust through probate. Rather the Trustee delivers the assets directly to the intended recipients. Accounts and property that pass using a will guarantees probate. The probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time-consuming – sometimes taking years to resolve.
A will is a public document; a trust is not. Anyone, including nosey neighbors, predators, and the unscrupulous, can discover what you owned and who is receiving the items if you have a will. A trust allows you to maintain your loved ones’ privacy after death.
Court challenges to wills and trusts do occur. However, potential litigants will find attacking a trust more complicated than attacking a will. This is because trust provisions, unlike will provisions, remain private.
A will – not a living trust – is the instrument you would use to name guardians to care for a minor child. In Texas, you may use an additional writing to designate a guardian; however, a revocable trust is not that document.
A will allows you to name an executor or personal representative who will take responsibility for wrapping up your affairs after you die. This typically involves working with the probate court, gathering and protecting your accounts and property not owned by a trust, paying your debts, and giving what remains to your named beneficiaries. But, this feature is not helpful if there are no accounts or property in your individual name (because you have a fully funded revocable trust).
WARNING: There is such a thing as irrevocable trusts, which you cannot change without legal action. This is outside the scope of this discussion.
Both a will and trust allow you to name who you want to receive your accounts and property.
A trust, and less commonly, a will, can include protective sub-trusts, which can allow your beneficiaries to receive some enjoyment and benefit from the accounts and property in the trust. Your attorney drafts it in this way to keep creditors from seizing the accounts and property from your beneficiaries. These creditors may include divorcing spouses, car accident litigants, bankruptcy trustees, and business failures.
While some differences between a will and trust are subtle, others are not. Book a call to schedule your in-person or virtual consultation, and let’s get started. Together, we will look at your goals and your financial and family situation to design an estate plan personalized to your needs.
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