THE DIFFERENCE BETWEEN A WILL AND A TRUST
Many individuals seem to have the mistaken belief that the terms “will” and “trust” are interchangeable. This belief can lead to significant costs that one assumed he was avoiding by executing estate documents. Below, I have listed a few differences that set wills and trusts apart.
A will must be probated, but a trust does not. If you have a will without a living trust, then all of the assets named in the document must go through probate - a process that could potentially cost your estate an exponential amount of money. When a will is probated, your estate will owe court costs and attorney’s fees that can easily eat up the bulk, if not all, of the assets you planned on giving to your beneficiaries. A trust must be funded. In order for the assets to pass to your beneficiaries through a trust, those assets must be properly placed into the trust. For real property, this requires deeding the property over into the name of the trust. A will becomes effective only upon the grantor’s death while a trust becomes effective immediately. With a trust, an individual can begin distributing property right away, at death, or after death.
A trust is private, but a will is not. A trust does not go through the probate process like a will does; therefore, your assets and distributions will not be made public record if passed through a trust. A trust can be an effective tool to save on estate taxes. An irrevocable trust is a mechanism that can be used to transfer ownership and control of assets so that they will not be considered a part of your estate subjecting those assets to any estate tax that may be imposed.