Creating an estate plan can be a daunting process. There are lots of decisions to make that may seem complicated and confusing. One of the most common questions at the outset is what the various documents do. The core of your estate plan is preparing for what happens when you pass away. Wills and Trusts both address how your assets will be distributed to your family members and how your family members will be cared for. So, what’s the difference?
Simply put, a Will is a document that outlines who will be in charge of your estate, who makes your funeral arrangements, where your assets will go, and who is nominated to be a guardian and/or conservator for your minor or disabled children (if you have any) upon your death. A Trust is a separate entity that is created (much like a corporation) where a fiduciary is appointed to administer the assets that you have transferred or funded into your Trust. The assets within the trust are held or distributed according to your instructions contained in the terms of the Trust Agreement. There are many types of Trusts, but this post is referring specifically to Revocable Living Trusts, which are the most common type of trust for estate planning purposes.
There are 2 other major differences between Wills and Trusts that help in determining which is best for your family’s needs:
1. Timing of Effectiveness. A Will takes effect upon your death. A Trust becomes effective as soon as it is signed and can address how your assets are handled in the event of your disability during your lifetime as well as after you have passed away.
2. Probate. A Will is governed by the probate court system, which means that your Will has to go through the court process when you have passed. Probate is a public process and can involve significant time and expense. Property passing under the terms of a Trust does not go through probate and remains private. A Trust can also hold property for the benefit of your children or other heirs until they reach a certain age, attain certain educational goals, or while they are experiencing a disability.
These considerations and many more are part of what Lansing Legal Group can help you to assess when preparing your estate plan. Careful coordination of your Will, Trust, or both, is something that we take pride in offering to our clients. Call us today for a consultation to get your estate planning process started.