Previously we talked a little about what it means to have a Will versus having an Estate Plan.
An Estate Plan usually includes a Trust, but a Trust is not a Will. Both are legal documents that say what you want to happen with your assets (money and possessions) after you die, but they do have important differences.
A Will is basically just a directive. It directs your survivors as to what your wishes are, or how you would like to see your assets allocated. But a Will is not a contract. A Will can’t be executed (carried out) until a probate judge says it can, which leaves it open for dispute. This process of going through Probate Court can be lengthy, costly, and it’s not private. Your Will becomes part of the public record for anyone to see.
A Trust, on the other hand, is a contract between you and your trustee. A Trustee is the person you name to manage and dispose of your affairs (i.e., outstanding bills and other payments). As a Contract, it is private, binding and immediately executable.
Regarding Trusts, there are many names for what is basically the same thing:
- Living Trust
- Revocable Trust
- Inter Vivos Trust
They are established while you are living, and they can be easily altered or updated until the time of your death. (We’ll discuss what happens next in another post.)
In addition, a Trust can have several clauses or provisions within it that are part of the Trust, but they not the entire Trust. Some examples of this include:
- Family Trust
- Credit Shelter Trust
An experienced Estate Planning attorney should review all of your options with you to make sure your family, and your assets, have the Trust that best serves them.