What is the Difference Between Wills and Trusts?
Trust Centered Estate Planning
Many people want to know what is the difference between wills and trusts. The information below will help you to understand why trust centered estate planning is far superior to will centered estate planning.
What is the difference between wills and trusts?
Proper Planning will not soften the sorrow of your death for those who survive but it will make their lives much easier
Consider These Estate Planning Questions...
Trust Centered Estate Planning
If I become incapacitated will my successor trustee will automatically take control of my estate?
When I die will the person I choose take control of my assets?
When I die will my estate be publicly probated by a court?
Will there be low legal and administrative fees when I die?
Can I control who receives my assets after die?
Can my assets be distributed to my loved ones within a few weeks?
Will my estate plan be difficult to contest?
Will a trust centered estate plan protect children with disabilities?
More information on what is the difference between wills and trusts
Why do I need to Legally Prepare?
Every four minutes someone dies unexpectedly in the United States – not from old age or sickness but unexpectedly. Lack of preparation needlessly adds cost, effort, and distraction at a time when your family should be focused on mourning your loss.
What is wrong with Probate?
Probate is public so your affairs will be public. Creditors or disgruntled family members can easily dispute, disrupt, and delay the management and disbursement of the estate. Probate always involves the court and limits what your loved ones can do. Probate takes at least nine months but can last years. Probate can be expensive, especially if it is contested. Probate always costs much more than preparing a trust centered estate plan.
What if I become incapacitated?
Guardianship and conservatorship are the legal system’s solutions for what to do with a person who cannot make decisions regarding themselves or their property. A guardian has to report to the court and family members about the decisions that are made, usually for the rest of the person’s life. Being appointed guardian and reporting take time and money.
Are trusts new?
No. Trusts have existed for hundreds of years. They are so powerful that Teddy Roosevelt was elected as a “trust buster” to break up the powerful trusts used effectively by the extremely wealthy of the day. What is relatively new is using trusts to benefit people of more ordinary means.
Who controls my assets in a trust?
You do. As the grantor and trustee of the trust you have absolute control over your assets. You can continue to use them, sell them, or even borrow against them.
If I die or become disabled, who will control my assets?
Usually, your spouse will control your assets. If you don’t have a spouse, a successor trustee, someone of your choosing, will control your assets.
What about Estate Taxes?
Trusts are used by most people to avoid the cost, time and contention of Probate. Most people do not owe estate taxes because their estate is under the estate tax threshold. However, a proper trust will give you maximum estate tax protection.
What is a "living will"?
A living will directs physicians to stop life support that is unnaturally keeping you alive if your condition is terminal. It shifts the burden of decision from the health care provider to you so that your wishes can be followed without inappropriate delay.
What is the difference between wills and trusts?
A will is basically a letter of instruction to the court about what to do with your property after death. A will can do nothing until you are dead. Every will must go through probate. There is no exception. A trust is an agreement to hold property for the benefit of another. The law treats a trust as separate legal “person.” A trust is not required to go through probate.
Does Joint tenancy avoid probate?
Joint tenancy is a type of joint ownership in which the entire asset is transferred to the one joint owner upon the death of the other joint owner. It is true that this transfer does not require probate but if both owners die at the same time or if the second joint owner dies without proper planning, then probate will still be required.
What is a durable power of attorney?
A “power of attorney” is document in which you appoint someone to act for you. If it is “durable” that person continues to act for you even if you lose the capacity to make your own decisions. Durable powers of attorney are powerful legal documents and can be very useful, especially when they are part of a trust centered estate plan.
How does a trust avoid probate?
Unlike a will, a trust can own property. And, the trust doesn’t die when you do. Instead, a successor trustee automatically replaces you and begins to manage the assets owned by the trust. The successor trustee can also distribute the assets to your loved ones. For a will to be as powerful as a trust, it must create a trust upon your death. To do so requires court involvement.
How do my assets get into my trust?
Real property is transferred to the trust by deed. Money in bank accounts will be transferred to trust upon your death when the trust is named as “P.O.D.” (“paid on death”). Life insurance will be transferred to the trust when the trust is named as a beneficiary. 401k and IRA accounts require special considerations because of income tax requirements. I can help you plan these properly.
Who should be a successor Trustee?
A trustee should be honest and responsible. No other particular qualification is necessary. A trustee does not have to be an accountant or a lawyer. Often, the best choice is a child or sibling.
Should a lawyer prepare my trust?
Preparing a proper trust is not a self-help task. To comprehensively plan for whatever the future may bring takes experienced and competent counsel.
What is a health care directive?
A health care directive is a document that gives someone else the ability to make health care decisions for you if you are unable to do so, again preventing delay. This document is sometimes referred to as a “health care power of attorney.”
What is Probate?
Probate is the legal system’s solution to what happens to someone’s property after they die. The court determines whether there is a valid will and appoints someone (the “personal representative”) to manage the estate. Notice of the probate is given to the public and to creditors and the assets of the estate are determined. Creditors are paid and assets are distributed to the heirs named in the will or according to the priority established by law. Finally documents are filed with the court to close the probate.
What problems are there with joint tenancy?
When you add a joint owner you lose control over your property. If the joint owner is sued, the judgment will be a lien on your property. Joint tenancy often results in greater taxes. If the joint owner becomes incapacitated or a judgment is entered against the co-owner you may end up controlling the property with a stranger. Joint tenancy does not allow the transfer on death to be flexible to account for future changes in your circumstances. It is not simple or easy to make wise decisions about joint tenancy. By the time we work through the possibilities and probabilities of the future it would have been simpler, easier, and more effective to have created a trust centered estate plan.
what is a the difference between wills and trusts?
A trust is an agreement to hold property for the benefit of another. The law treats a trust as separate legal “person.” Like a will, a trust can contain provisions for the distribution of you assets to your loved ones after you die but the assets are distributed without probate. While you are alive you maintain possession and control of your assets. A revocable living trust is simple, convenient, and affordable. It does not have to go through probate. A will is basically a letter of instruction to the court about what to do with your property after death. A will can do nothing until you are dead. Every will must go through probate. There is no exception.
What happens if I become incapacitated and i have a trust?
If you become incapacitated, a successor trustee chosen by you, replaces you and manages the assets owned by the trust on your behalf.
How much time does take to legally prepare?
It is brief, simple and convenient. You will meet with me to discuss your needs, desires and particular circumstances. I will prepare the documents. A few days later we will meet again to sign the documents. It takes much less time, effort and money than it will take to deal with death and disability if you do not prepare.
can my trust keep going after I Die?
After you die your trust can continue to be managed by the trustee you selected. The trustee will distribute assets according to your direction. For example, the trust can hold assets for a child’s education or for a child who is not ready to manage the assets himself or a for a child with disabilities. You can direct the trustee to do just about anything you want with your assets.
Do I need a will?
A trust centered estate plan includes a particular type of will called a “pour over” will. In most cases the will won’t be used. If it is used, it puts all assets into your trust. Your trustee can then distribute the assets to your loved ones, as you directed.
What is a trust centered estate plan?
It is a plan prepared by me that includes a revocable living trust, pour-over wills, durable powers of attorney, living wills, health care directives and deeds. It is comprehensive, administratively easy and affordable.