Both wills and trusts are documents that can direct how assets get distributed to a person’s beneficiaries. Depending on the situation, a person could have both a will and a trust as part of their estate plan.
One of the major differences between a will and a trust is that assets that go through a will have to go through probate whereas assets going through a trust do not.
In probate, the probate court oversees the enforcement of the will. This can add time and expense to distributing a person’s assets. This court supervision also makes using a will to make conditional gifts, such as specifying money for a beneficiary’s possible future college tuition, a more inefficient process. For some, a further potential downside of probate is that the will becomes a matter of public record.
In contrast, trusts generally operate without direct court supervision. The trustee is able to follow the directions detailed in the trust document as they see fit. This arrangement allows for more complex distributions to beneficiaries. For example, beneficiaries could receive their inheritances over time rather than all at once, or receive money for specific purposes or milestones in a beneficiary’s life. A trust could also better handle money set aside for a beneficiary with special needs.
One point to look out for in using a trust to distribute assets is that a trust can only distribute assets that have been placed into the trust. Any remaining assets outside of the trust upon a person’s death must go through probate. Even if a person’s will specifies that all remaining assets go to a trust, the process of transferring those assets to the trust must be overseen by the probate court.
However, a trust may not be necessary for every person’s situation. Many states allow for a streamlined probate process if a person’s total assets are below a certain level.
A specific point where a will may be necessary is if a person has minor children. Many states mandate that the designation of a guardian in case of the parents’ death can only be done through a will.
Whether a will and/or trust works best depends on a person’s specific needs and financial situation. An experienced elder law attorney can work with a client to develop an estate plan that fits their particular circumstances.
To develop an estate plan that fits your specific needs, please call Martha C. Brown & Associates at (314) 962-0186.
