Understanding the Differences between Trusts and Wills
Comparison Between Wills and Living Trusts
Revocable Trusts vs Wills
Wills
- Become effective upon the death of the testator
- Property passes through the probate process
- A Will is a public document
- Allows for the specification of a caretaker for minor children
Revocable Trusts
- Become effective when written and signed by the grantor
- Property bypasses the probate process
- A Trust is a private document
- May offer tax advantages
- Allows the grantor to have more control over when and how assets are distributed
Wills
A will goes into effect when the testator (the person who created the will) dies. The will provides instructions to the court for assigning guardians for minor children and distributing the personal property and other assets of the decedent. However, the benefits of a will as a standalone document are limited. When someone passes away with only a will, the estate goes through probate, an expensive and lengthy court-supervised process. In probate, the estate and proceedings become public record. When a will is accompanied by a trust, the family is able to avoid probate. That’s just one of the many benefits of having a trust-based estate plan.
Living Trusts
Unlike a will, a trust goes into effect the moment that the trust documents have been signed, rather than upon the death of the grantor (the person who is the creator of the trust). A trust only covers the specific property which has been transferred to it. In some situations, a trust may protect beneficiaries from creditors. Courts do not oversee the administration of a trust and therefore trust documents are not part of the public record. In some situations, especially for married couples, there may be tax advantages to having a trust. A trust also allows the grantor to have more control over the distribution of his or her assets. For example, property held in a trust can be distributed to beneficiaries in smaller ongoing amounts rather than in a single lump sum, which may be more appropriate for beneficiaries who are minors or who are disabled. Finally, although it is possible to contest a trust, it is more difficult to contest a trust than a will.
