There are two major differences between a Living Trust and a Will. The first is whether the assets will go through the probate process and the second is when the document goes into effect. A Living Trust does not pass through probate upon the death of the Living Trust’s grantor because it comes into effect during the grantor’s lifetime. A Will goes into effect when the testator dies so the assets within the Will must pass through probate.
Probate is a court supervised process where a decedent’s assets are identified, then debts are paid, and then the remaining assets are distributed to beneficiaries. Many choose to create a Living Trust so that assets do not have to pass through probate, saving loved ones from a potentially lengthy and costly court process. A Living Trust avoids the probate process because the assets within it are transferred during the creator’s lifetime. When creating a Will an individual is planning for those assets to pass after their death, one of the reasons probate exists is to ensure that an individual’s assets are correctly distributed to those having a claim to them.
As stated above a Living Trust allows a person to pass assets on to others during their lifetime, rather than willing them to transfer upon their death. When an individual creates a Living Trust, they assign a trustee to manage the trust. While the grantor is still alive, they generally have access to the trust and can withdraw assets or change the trust’s contents or terms as they please, this is why it is also referred to as a “Revocable Trust”. Because a Living Trust becomes active while the grantor is still alive, it can be extremely beneficial if the grantor becomes incapacitated. In this event a trustee can continue to manage the trust and ensure that bills or other expenses are paid. This can help an incapacitated individual avoid receiving a court appointed guardian for their assets, and instead choose an individual whom they trust. When a grantor passes, the trustee will pay any taxes owed on the trust and then distribute the remaining assets in accordance with the terms of the trust. Another advantage to making a Living Trust is that it will, generally, overrule terms within a Will and is less likely to be contested.
A Will only comes into effect after the testator dies. The executor of the Will must pay any taxes or debts owed by the testator then distribute the remaining assets to the designated beneficiary. One thing a will can do that a Living Trust cannot is provide instructions on who is to become the guardian of a testator’s minor child or children. The creation of a Will is usually easier than the creation of a Living Trust, which is why some individuals may avoid the latter.
When creating a Living Trust or a Will, it is important to understand how they can work together. A Living Trust usually contains financial assets and real estate. This means that not all of an individual’s assets are part of the Living Trust. If you do not want to leave your remaining assets intestate, a Will needs to be created. If you are thinking about only creating a Will to pass your assets to beneficiaries at your death, consider what would happen if you became incapacitated. If you would like to specify how you want your finances to be managed in this event, the creation of a Living Trust should be considered.
Regardless of what option an individual chooses, an attorney should be contacted so that the Living Trust or Will is created in a way that will be legally sound and the terms within each can be easily followed.
If you need assistance with creating a living trust or drafting a will, don’t hesitate to reach out to the trusted legal experts at the law office of Lacey Lyons Rezanka. With our extensive experience and deep knowledge of estate planning laws in Brevard County, Florida, we can guide you through the process and ensure that your wishes are properly documented and executed.