Confused about the differences between wills and trusts? If so, you’re not alone. While it’s always wise to contact experts like us, it’s also important to understand the basics. Here’s a quick and simple reference guide:
What Revocable Living Trusts Can Do – That Wills Can’t
- Avoid a conservatorship and guardianship. A revocable living trust allows you to authorize your spouse, partner, child, or other trusted person to manage your assets should you become incapacitated and unable to manage your own affairs. Wills only become effective when you die, so they are useless in avoiding conservatorship and guardianship proceedings during your life.
- Bypass probate. Property in a revocable living trust does not pass through probate. Property that passes using a will guarantees The probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time consuming – sometimes taking years to resolve.
- Easily provide a lifetime of Asset Protection for your loved ones. In Arizona, trust-based planning allows for your hard-earned funds to pass to children, grandchildren, or others in a protected fashion. More specifically, we often implement “protective sub-trusts” which may allow your beneficiaries access to their inheritance while also insulating the assets from potential attack by creditors, such as divorcing spouses, car accident litigants, a bankruptcy court, and business failure. In most cases, we strongly believe this is a far better option than leaving a respective beneficiary with a one-time, lump sum check.
- Maintain privacy after death. Wills are public documents; trusts are not. Anyone, including nosey neighbors, predators, and unscrupulous “charities” can discover the details of your estate if you have a will. Trusts allow you to maintain your family’s privacy after death.
- Protect you from court challenges. Although court challenges to wills and trusts occur, attacking a trust is generally much harder than attacking a will because trust provisions are not made public.
Why a Will May Still be a Good Idea
- Name guardians for children. Only a will – not a living trust or any other type of document – can be used to name guardians to care for minor children.
- Specify an executor or personal representative. Wills allow you to name an executor or personal representative – someone who will take responsibility to wrap up your estate under a probate, should one be necessary. Remember, however, a trust which is fully-funded with your assets will help to avoid ever having to hold a probate proceeding.
What Both Wills & Trusts Can Do:
- Allow revisions to your document. Both wills and living trusts can be revised whenever your intentions or circumstances change so long as you have the legal capacity to sign
- Name beneficiaries. Both wills and trusts are vehicles which allow you to name beneficiaries for your assets. A major difference, though, lies in how quickly and in what form the beneficiary will eventually receive the assets.
While some of the differences between wills and trusts are subtle; others are not. Together, we’ll take a look at your goals as well as your financial and family situation and design an estate plan tailored to your needs. Call us today and let’s get started.