Everyone has heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both are useful estate planning documents that serve different purposes, and both can work together to create a complete estate plan.
When Do They Go Into Effect?
One main difference is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who receives your property at your death and it appoints a legal representative, called a personal representative in Florida, to carry out your wishes. When the creator of a trust becomes incapacitated, the trustee can step in and manage the assets. The trustee can also distribute assets once the creator dies.
What is Included?
A will covers any property that is in your individual name when you die. It does not cover property held jointly with another person. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included, it must be put in the name of the trust. This process is called funding the trust.
Is Probate Necessary?
Another difference is that a will passes through probate. During probate, a court oversees the administration of the individual’s assets. They enure the will is valid and the assets are distributed the way the deceased wanted. In contrast, assets owned by a trust pass outside of probate, so a court does not need to oversee the process. This saves time and money. Another advantage of a trust is that it remains private and is not made part of public record.
Each of these estate planning documents have their own advantages and disadvantages. It is important to discuss your overall estate planning goals and wishes with your attorney to determine which estate planning document will best meet your needs.