What is the difference between a will and a trust?
Generally, the provisions of a will direct how you wish to distribute any assets to your heirs which are subject to the probate process. A will does not control any assets other than those which pass through the probate process. Probate is a court proceeding and requires your personal representative (a person you nominate in your will) to commence a probate proceeding after you die. The proceeding is usually in the county in which you lived in when you died.
A will also states your preference as to who will handle your estate (the personal representative), as well as any burial instructions or who you might choose to be a guardian for any of your surviving minor childen. After you die, creditors have a right to file claims in your probate estate.
Having a will does not avoid probate. This is a common mis-conception.It is actually quite the contrary. The will goes hand in hand with the probate process. The will is simply a directive which states who is to receive your probate assets.
Probate is not necessarily the nightmare as it is often portrayed. After all, the person drafting the will is dead. There will be simply a directive of how you want your estate distributed. Yes, it does involve the court system, but unless there is a fight over the will, commonly referred to as a will contest, everything should proceed smoothly. It does take some time, but so does the administration of any estate, whether it is a probate, trust or non-probate type adminstration. There are many matters needing attention when a person dies iwhich simply cannot be avoided. For example, it may be necessary to sell a residence. This may take time. It will likely be necessary to clean out the living quarters or residence. This may take time. It may be necessary to file income tax returns or estate tax returns. Dealing with tax returns takes time.These are not the fault of the probate process. It is just part of life and death.
With the use of a revocable trust. your assets would generally be titled in the name of the trust or redirected to pass into the trust upon your death through a beneficiary or payable on death designation. If properly coordinated the assets the assets held within the trust do not need to pass through a probate proceeding.
Although perhaps oversimplified, there are generally four reasons why people use a trust estate plan over a will estate plan. First, a trust, and its disposition provisions, are generally not a public record and therefore the use of a trust offers more privacy. Second, the assets in a trust are not subject to the probate process. Third, if there is real property in more than one state, the use of the trust, will avoid multiple probates in each of the states where real property is held.The fourth reason for creating a trust is to enable a successor trustee to assist with the management of your financial estate should you become disabled. In our experience, it is much easier to be acting as a successor trustee in managing a disabled person's assets than it is to be acting pursuant to a power of attorney.
Creating a trust now may cost more now, but, in the long run it may save you and your estate less, by avoiding the probate process.. With a trust you may pay more now, but less later.With a will estate plan you pay less now, but more later. Remember, there is no free lunch.