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Last Will & Testament
As mentioned above, a last will appoints a person you want to oversee your estate after you pass away. A will also tells your executor how to distribute your property to your beneficiaries. Within reason, you can define how you would like your heirs to use the gifts received. You can also appoint a guardianship over your children in a will.
Revocable & Irrevocable Trust
There are many different types of trusts, and not all trusts are the same. Each different type of trust offers different types of protections. For example, a revocable trust is the most common type of living trust. The grantor is the person that creates the trust. Once the grantor creates the trust, they must then fund the trust. You fund a trust by transferring title to your property into the trust. The grantor will usually serve as the trustee of the trust. This allows the grantor to move property in and out of the trust or change the terms of the instrument.
On the other hand, an irrevocable trust also allows the grantor to transfer property to the trust. However, contrary to a revocable trust, an irrevocable trust takes the trust assets out of the trustmaker’s hands. As a result, the grantor no longer owns or controls them the trust assets. In this regard, an independent trustee would manage the trust assets and make all the decisions regarding those assets on behalf of all the trustees. These decisions may or may not include the grantor. The trustee (not the grantor) has full control over administering the trust based on the terms outlined in the trust. Another critical difference is that once created, the grantor cannot terminate the trust as it becomes irrevocable.
Key Difference Between a Will and Trust
A last will goes into effect once a person passes away. On the other hand, a living trust is valid as soon as it is signed. Keep in mind, both a will and revocable living trust are modifiable up until the time the grantor passes away. As mentioned above, once the grantor dies, assets identified in a person’s will must go through the probate process before the estate’s personal representative can distribute the assets.
In contrast, property passing under a living or irrevocable trust avoids the court probate process. This is a key and most important difference between a will and trust. The trust terms explain how the successor trustee should transfer assets to beneficiaries. Keep in mind, the trust can continue to hold property for the benefit of beneficiaries (for example a minor) after the trustor’s death.
The successor trustee will continue to administer the trust until all the trust provisions are complete. It is essential to understand that a revocable living trust allows the trust maker to control their trust property while living. For example, the trustor can fund the trust to make sure their living expenses are covered in his/her old age. A living trust can also appoint someone to take over for them should the trust maker become incapacitated. This would avoid the need for a court conservatorship. A will, however, does not plan for mental disability nor avoid does a will avoid a court conservatorship.
Tips When Considering the Difference Between a Will and Trust
When considering the difference between a will and trust, it will be helpful to have a full understanding of the value of your estate. Ask yourself – will the difference between a will and a trust for your estate result in a more complex or expensive administration process after you pass away? For example, if you have a will, will your heirs need to probate your estate? On the other hand, for smaller estates, the difference between a will and a trust may have little to no effect on the required estate administration steps after your death. Contact A People’s Choice for more information about our estate planning services. Proper estate planning does not have to be expensive, nor does it require hiring a lawyer. A People’s Choice used the same estate planning software that many California attorneys use. We can prepare a living trust and pour over will for you as well as any other estate planning documents you may need and offer a full array of estate planning services. Call us today at 800-747-2780.
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