Most people are familiar with wills: they are documents that are written to let everybody know what is to happen to a person’s property after they die. But fewer people are familiar with trusts, and most are confused as to what the difference is between the two. Where a will only becomes effective after a death, a trust can be used to distribute property either before a death or after. Both are devices that are used in estate law in order to accomplish specific goals. Let’s take a closer look at the main differences between the two.
When a person dies, their will is read so that the disposition of any property that is in their name can be determined. A will passes through a court process called probate to make sure that it is valid and that the instructions that it holds are followed. Wills generally address important issues like guardianship of children, appointment of the person who will administer the Estate, and distribution of all the decedent’s assets.
When a person sets up a trust, they name a trustee to oversee their property, either during the remainder of their life and/or after they die, and to follow the instructions in the trust, which generally arranges for the transfer of property into the possession of named beneficiaries. This transfer can be addressed while the person is still alive or after the person dies. A trustee can be a bank or other financial institution or an individual, and the beneficiaries can be the person who sets up the trust, or those they wish to distribute any property that has been placed in the trust to before or after their death. Trusts do not need to involve probate or to enter its details into the public record.
Knowing whether you should set up a trust, a will or both, is a complex question and the answer depends on the specifics of your situation. To discuss the options that work best for you, contact our office to set up a convenient time for a consultation with one of our estate law professionals.