What is the Difference Between a Trust and a Will?

What is the Difference Between a Trust And a Will?

 A Trust and a Will are two different kinds of estate planning documents. To appreciate the difference between a Will and a Trust, it is important to understand what probate is. 

 What is Probate Court?

 The probate court is a division of the circuit that is designated to address the estates of people who are disabled or deceased.

What does a Will do?

A Will is essentially a document that provides instructions to the probate court. For example, a Will can name beneficiaries to inherit property that is subject to a probate proceeding after you pass away. It can also name guardians of minor children.  A Will can provide for the designation of a Personal Representative, the person responsible for administering and managing the probate estate.

 Can Probate be Avoided?

It is usually possible to avoid the need for a probate proceeding for your property. Some forms of joint ownership can avoid the need for probate. For example, if you own an asset as joint tenants with rights of survivorship with another person, the asset will belong to the surviving joint owner if you pass away. As another example, if you are the sole owner of an asset that has a designated beneficiary, then the person named as a beneficiary will inherit the property when you pass away. Trusts are another way to avoid a probate proceeding. Property that is owned by a trust can generally be administered and distributed according to the terms of the trust without the need for a probate proceeding after you pass away.

What is a Trust?

A Trust is an entity that can hold property and provide that the property is distributed according to the terms of the trust. There are several important roles when creating a trust. The Grantor or Settlor of a trust is the person who created it. The Beneficiary of a trust is the person (or people) who are entitled to receive distributions of income and principal from the trust, under the terms described in the trust. The Trustee is the person responsible for administering and managing the Trust.

 Conclusion

Wills and Trusts are two types of estate planning documents. While they both can provide for the distribution of your assets to heirs after you pass away, there are significant differences between them. Talk to your estate planning attorney to determine what estate planning documents are right for you.