What’s the Difference Between a Will and Trust?
Many people use the terms “will” and “trust” interchangeably when talking about estate plans. However, these two terms are very different. It is important to understand the difference between a trust and a last will and testament when creating an estate plan.
What is a Last Will and Testament?
A will – or more formally known as a Last Will and Testament – refers to a legal document that allows the testator (the person creating the will) to name beneficiaries of his or her probate estate upon death.
When creating a will, the testator must name a Personal Representative (otherwise called an executor) of their estate. The Personal Representative will administer the estate upon the testator’s death and distribute the testator’s assets according to their wishes.
If a person dies without a will, their probate assets will be distributed among his or her heirs according to Florida’s intestacy laws as provided in Sections 732.102 and 732.103, Florida Statutes.
What is a trust?
A trust is a fiduciary arrangement (a contract) between a Grantor and a Trustee whereby the Trustee holds and manages the trust assets for the benefit of the beneficiaries. The most common type of trust is a revocable living trust, in which the Grantor, Trustee, and Beneficiary are all the same person.
If the grantor becomes incapacitated or disabled, the trust usually contains terms regarding who is to continue to manage the trust assets (typically a successor trustee named in the Trust). When the grantor dies, the named successor trustee will assume control over the trust assets and distribute the assets to the beneficiaries according to the grantor’s wishes.
What are the differences between a will and trust?
The biggest difference between a will and trust is a Trust is a “living” document that governs assets once they are transferred to the Trust; whereas a will is an “ambulatory” document, which means it cannot be enforced until the testator dies.
An additional benefit to creating a trust is it also governs disability planning. If the Grantor of a trust becomes mentally incapacitated, a trust can contain terms governing such incapacity and how to handle the trust assets in such an event. Because a Will isn’t valid until after the testator dies, it cannot govern any disability planning.
One of the more well known differences between a will and trust is that a trust avoids probate. By creating a will, there is no probate avoidance – instead, the will merely states who is to inherit the probate assets once the administration is completed. On the other hand, all assets that are titled in the trust will avoid probate upon the grantor’s death.
Another major difference between a will and trust is the complexity of each document. Because a trust is a living document, it is usually lengthier and more complicated because it must cover many hypothetical situations (probate avoidance, disability planning, distribution of assets after death, etc.). On the other hand, a will is much simpler because it states “who gets what” upon the testator’s death.
Just because there are several differences between a will and trust, it does not necessarily mean that you should choose one over the other. Many people can benefit from drafting both a will and trust. If you are considering creating an estate plan but are not sure whether you should use a will or trust, consult with an experienced St. Petersburg estate planning lawyer.
Schedule a consultation with our lawyers at Legacy Protection Lawyers, LLP, to determine whether you should create a will or trust (or both) in your unique situation. Call at 727-471-5868 for a case review.