Estate planning professionals, especially lawyers, get a lot of questions throughout the estate planning process. One of the most common questions they get deals with the differences between a will and a trust. Before you can ask for a will or a trust, it is probably a good idea to understand what they are and why they are different.
The first difference between these two estate planning tools is that a will is a piece of paper, while a trust is a legal entity, much in the same way a corporation is a legal entity. A will is not powerless, but it is not its own entity. A will is basically a set of instructions the court uses to administer your last wishes. A trust is not based as much on your last wishes, and its more involved with management of property than distribution.
The only time a will is enacted is after the subject of the will has passed on. Prior to the death of the subject, a will has no power over any property distribution and it cannot be used to determine property ownership.
A trust takes effect the moment it is signed into existence. There is property that is moved into a trust that the trustee can transfer ownership of whenever they want. A trust can also be used to set up charitable funds during the subject's lifetime, and it can also be used to dictate business decisions and property distributions many years after the trustee has passed on.
A will is used to transfer property that is owned by the deceased. A will can only designate property distribution as it applies to the deceased, and it cannot dictate any other property ownership changes.
When a trust is created, property is transferred into the trust from anyone who decides to transfer it. Once a property is transferred into the trust, the trust as a legal entity owns that property can can transfer it to whomever it wants. A trust cannot say that it transfers all of the property of the deceased trustee to someone else because it is not a will. A trust can only transfer that property which it owns.
A will has to pass through probate before it is approved and acted upon. If the court finds anything wrong with the will, then the deceased's final wishes may not be honored.
A trust does not have to go through a probate process, which means that a trust does not have to take on the extra fees of a probate court and is a much faster solution. If you are looking for a way to get your assets transferred to loved ones without paying for a probate court and waiting months for everything to be finalized, then you need a trust.
A trust and a will are both powerful tools in the estate planning world, but they are very different. With a trust, you are creating an entity that can take on any property and distribute property as it sees fit. With a will, you are creating a set of instructions for a probate court for transferring ownership of your property after you have passed away. Only your attorney can give you the right answers when it comes to deciding between a trust and a will.
No matter what age a person may be, estate planning seems to be the furthest thing from their mind. It is easy to convince people of the importance of estate planning, but it is difficult to get them inspired enough to start the process.
If you know you need to attend to your estate planning but just cannot get motivated, then there are steps you can take that would help you to get started. Once you start the estate planning process, you will find it easy to ride that momentum to the project's completion.
Your lawyer will need to generate an action list of things you will have to do to complete your estate planning. The amount of action items you have will depend on a lot of things, but you could be looking at a good sized list. The good thing is that lists tend to act as great motivators and it may be easier for you to get yourself motivated to do your estate planning when you know exactly what you have to do.
Lists can quickly become demotivating if you are not sure exactly what you are supposed to be doing. As you get your action list from your lawyer, be sure to ask questions and get the guidance you need to complete each task. There is no such thing as a silly question, especially when you are working on something as important as your estate.
Before you leave your lawyer's office, the two of you should sit down and take care of all of the easiest action items on your list. You will be left with a list of action items that will require a great deal of thought on your part, but at least you will know that all of the easy items have already been taken care of.
Remember that you can, and should, update your estate plan whenever you want. It is impossible and impractical to think that you can create an estate plan now that will stand for the rest of your life. When you sit down to answer your questions, you should put a time frame of no less than five and no more than 10 years. Answer all of your questions and settle all of your issues based on that time frame, and then plan on doing an update in 10 years.
People find that funding a trust is really just a process of transferring assets from one place to another, and it can be very tedious. This will probably be the most difficult part of your estate planning process to finish, but only because it can require a lot of paperwork and take time. You should do this last so that you can remind yourself that once this part is done, your estate planning is done.
Estate planning is not something people look forward to doing, but most people understand the importance of getting the process done. With a little help from your attorney, you can muster up the motivation you need to finally get this important process done and preserve your estate for your family.