Testamentary documents are often a cornerstone of modern estate plans. While people can include a host of different documents in their plans, one of the most the most important documents is the one that describes what will happen to their property and their dependent loved ones when they die.
Most testators will use either a will or a trust to arrange for their assets to pass to loved ones and to provide support for their dependent family members after their death. Those trying to determine which documents would be the best option in their case typically need to understand the differences between a will and a trust to make an informed decision.
What separates a will from a trust?
A will only has authority when someone dies
A will or last will and testament is a legal document describing a testator’s intentions for the allocation of their resources and the protection of their dependent loved ones after their passing. The document only has legal authority after someone’s death. The paperwork that creates a trust, on the other hand, can take numerous different forms. Some people only fund their trust at the time of their deaths, but others may create a trust that they manage while alive and that then transitions to someone else’s care after their incapacitation or death.
Trusts last for longer
The person tasked with estate administration typically has to follow state law regarding fulfilling someone’s financial obligations and following their last wishes as outlined in the will. Once the probate process is done, they no longer have any responsibility. A trustee, on the other hand, may serve in their role for many years. For as long as the assets used to fund the trust persist, the trustee may need to continue managing them and occasionally distributing them to beneficiaries.
Trusts give more control
A will typically only allows someone to designate a beneficiary for certain assets and to name specific people to assume certain responsibilities. A trust can provide far more detail regarding when people can use estate resources and why.
Trusts can be harder to challenge
A will is a standalone legal document that only has authority if the testator was of sound mind when drafting the document and the paperwork complies with all statutes. People can challenge a will by claiming someone lacked testamentary capacity or that they were under the influence of an outside party. A trust is a separate legal entity that owns the property used to fund it, and therefore it can be much more difficult for people to challenge a trust. Those anticipating a lot of conflict around their state or worried about tax obligations might find that a trust would be valuable in their situation.
Understanding how a trust is different from a will may help people choose the right tools for the legacy they want to leave and the protection they need in their golden years.