Difference Between a Will and Trust
Is there a difference between a Last Will and Testament (will) and a trust? This is a common question many people have when trying to make important decisions for the future of their families. Most people believe a will is all that is necessary to protect family members upon their own passing, however this is not always the case. There are some very important differences between the two that can impact how smoothly surviving loved ones move forward following a difficult time. The Law Office of Aubrey Carew Sizer PLLC helps families throughout Arlington, Alexandria, Fairfax County, and Northern Virginia with their estate planning needs. Feel free to reach out to us with any questions you may have about how to protect your family's financial future through estate planning at (571) 403-2619.
One Major Difference - Probate
In an estate plan, there are advantages of both wills and trusts. Many people's estate plans include both, and in some cases more than one trust. A will must go through probate, which is a legal and often a lengthy process that may take several months or longer. While it is not always the case, probate can be expensive. The probate process is also public, providing no privacy for the family in what can be sensitive issues. Considering all of this, a will does still remain a foundational piece of many families' estate plans.
Primary Differences Between Wills and Trusts
Every family will have a unique set of facts and circumstances that will impact their need for only a will or a will and a trust. There are situations in which families can be well served using only a will, and others in which one or more trusts are preferred. The following are some key differences between using only a will versus using a plan with a will and a trust.
- A will does not avoid probate, while a trust does (protects privacy as well)
- Wills provide minor children guardianship, while trusts do not
- Wills are more easily contested than trusts, due to the fact that they are public information
- Wills do not provide tax benefits or protection from creditors, while certain types of irrevocable trusts can provide both
To further explain the difference between a will and trust, we will break each estate planning legal document down further.
Advantages of Wills
Those who pass without a will (intestate) often leave family members and loved ones in a state of confusion and emotional distress as they attempt to settle a deceased loved one's affairs peacefully among themselves. A will is a legal instrument to help ensure that upon your death, your wishes for the care of minor children you may have and how your property is distributed will be properly handled. Wills are often the fundamental piece of any estate plan, as they can clearly define exactly how you want your estate to be transferred to beneficiaries, and can also ensure that your dependents are taken care of according to your wishes.
However, it is important to understand that there are certain things a will cannot do, according to the American Bar Association. For instance, regardless of the wishes stated in a will, named beneficiaries of insurance policies or Individual Retirement Accounts will receive those benefits.
Estate planning issues can be very complex and visiting with a knowledgeable attorney at The Law Office of Aubrey Carew Sizer PLLC can help ensure your legal and financial rights remain protected.
There are two general classifications of trusts - revocable and irrevocable.
Once an irrevocable trust has been established, it cannot be modified; this type of trust is not as flexible as a revocable trust. Irrevocable trusts are often used as safeguards against beneficiaries, creditors, or others who may desire to make claims on assets. The American Bar Association concurs that an irrevocable living trust is used chiefly to create specific asset or tax protection results.
Revocable living trusts are more flexible, making it possible to keep control of assets, make changes, or even dissolve the trust when events such as the acquisition of new assets or a divorce occurs. Beneficiaries receive assets following death, and do not go through the probate process which ensures more privacy than either a will or irrevocable trust. Revocable or "living" trusts are created over the course of a lifetime, are often modified as the changes in life dictate (i.e. disability, illness, etc.). It is important to note that revocable trusts do not protect against estate taxes.
There are various trusts within these two primary categories; these include special needs trusts, gun trusts, charitable trusts, marital trusts, and life insurance trusts, among others. Visiting with an experienced estate planning attorney can help you determine which type of trust may be right for you.
Consult With a Dedicated Estate Planning Attorney
Understanding the difference between a will and trust is critical when planning for your family's future. Without proper estate planning, families and loved ones are often left to make unexpected and significant decisions, which often creates rifts between family members. The last thing most people want is for their loved ones to fight over money, property, insurance policies, or other assets following their deaths. This can result not only in substantial legal costs, but months or even years of battling on and on between family members and with the courts.
Do you need only a written will, or would adding a trust to your estate plan be better in your situation? There are advantages and disadvantages to all these estate planning instruments; however, we are here to help you better understand and navigate the complexities of wills and trusts. One thing is for certain; if you do not plan for the future of your family after your passing now, tomorrow may be too late. We are never guaranteed one more day. At The Law Office of Aubrey Carew Sizer PLLC, we want to help you protect those you love well into the future. Call (571) 403-2619 now to schedule a consultation and learn which estate planning documents will ensure that your wishes are carried out.