What is the difference between a will and trust?
There are many differences and some similarities between a will and a trust. This article discusses some of those differences and similarities. Everyone's situation is unique, so for legal advice about which is best for you, you should speak with an experienced estate planning lawyer, many offer free initial consultations.
What is a will?
A will is a document that specifies who will receive your assets when you pass away. The legal name for a person when they execute a will is called a Testator. The legal name of the person who a Testator places in charge of their estate is called a Personal Representative in Arizona. In some states, a Personal Representative is also known as an Executor. Testators decide in their will a number of things to happen after they pass away including:
Wills are essentially instructions to a probate court about these decisions. Wills do not avoid probate. If you just have a will, when you pass away your assets will likely have to go through the court supervised estate administration process called Probate.If you were to pass away without a will, the probate court would also get involved and your estate would pass according to Arizona’s laws of intestacy. This sets out the order of who assets are distributed to. If you do not have any heirs on the list provided for in the state statutes, your estate will escheat to the state, meaning that your assets would go to the State of Arizona.
What is a trust?
A trust document is a written document that is signed by the person who makes the trust. This person is called the "Settlor." The trust will list the property in the trust as well as the person in charge of the trust called the "Trustee." With a Living Trust, usually the person making the trust also retains control of the trust while the person who made the trust is still living. It also specifies a successor trustee to take care of the trust after the person who made the trust passes away or if they become incapacitated. The Trust will also specify who gets the property in the trust when the Settlor passes away.
Differences and Similarities
With both wills and revocable living trusts you can:
Things a trust can do that a will cannot:
Things a will can do that a trust cannot do:
Revocable Living Trusts Avoid Probate
Most people use living trusts to avoid probate. Probate is the court-supervised process of wrapping up a person’s estate. Probate can be expensive and time consuming. There are numerous fees and expenses associated with probate which are avoided by using a living trust.
Special Abilities of a Trust
A living trust is a flexible document because you can specify who gets what property when you pass away and how. For example, you can withhold distributions until the person getting your property reaches a certain age or finishes school.
Transferring Property Into the Trust
It is easy to put assets into your trust. You can put your house into a trust using a deed. You could put your bank accounts in the trust by re-titling them in the trust's name. It must be done correctly or the property could end up in probate. Many lawyers skip this step in the estate planning process but it is very important!
Deciding what is best for you should be done in consultation with an experienced lawyer. There is no "one size fits all" document that you can get online because everyone's situation is unique.