Wills and trusts are both important estate planning tools. But they accomplish very different goals. If you understand the difference between a will and a trust, you have an excellent foundation for planning your estate.
A will is a legal document in which you designate the individuals or organizations that receive your assets and property on your death. Your will also usually expresses your funeral and burial wishes. In addition, your will can identify who will take care of your minor children after your death.
A trust is a legal arrangement set up for the specific purpose of managing and controlling your assets while you are living and after your death. In a trust, the grantor or trustor (person creating the trust) establishes the purpose of the trust and designates a trustee to manage and distribute the trust assets according to the terms in the document.
While there is only one type of will, there are many different types of trusts. A revocable living trust is a common type of trust used in estate planning.
A will and a trust are different in a number of important ways. Following is a summary of the primary differences.
Property and assets included in a will are potentially subject to probate in Arizona. Assets placed in a living trust are not subject to probate. Many other types of trusts also are not subject to probate.
When a will is probated, the will itself becomes a public document. Information about the decedent’s assets is publicly available.
In contrast, since a living trust is not subject to probate, the document is not public. No information about the assets becomes publicly available.
A will addresses all property in the estate on the death of the person creating the will (called the testator). A trust only includes property and assets placed in the trust by the grantor.
A person who makes a will is free to revoke or change the will at any time before death. Revocable living trusts also may be revoked or changed by the grantor. Some trusts are irrevocable by their nature and terms, and those trusts cannot be changed or revoked.
A will becomes effective on the death of the testator. A trust goes into effect when the assets are transferred into the trust.
A will is operative as soon as the testator executes it in accordance with the requirements of Arizona law. In contrast, a trust is not operational until the grantor transfers assets into the trust. Execution of the trust is one of two steps necessary to create a trust.
Tax laws apply differently to wills and trusts. In some individual situations, taxation will be a factor in determining the best approach to an estate plan.
In some circumstances, a will is the right approach. In other circumstances, a trust is a better choice to fulfill your wishes and protect your family. Talking with an experienced estate planning attorney is the only right way to determine whether a will or trust is the best tool for accomplishing your goals.
In many cases, a sound estate plan includes both a living trust and a will. If a person has a living trust, a will acts as a safety net to ensure that the estate plan covers all the deceased person’s assets. If the person dies with assets that were not transferred to the trust, the will covers distribution of those other assets. This type of will is called a pour-over will. Without a will, assets in an estate that fall outside a living trust would pass according to Arizona laws of intestate succession.
Choosing a will or a trust is only the first step in creating a complete estate plan. Other important documents are essential to protect you and your family during and after your lifetime.
Everyone should be wary of Do-It-Yourself (DIY) services that offer form wills, trusts, or other legal documents, and claim to help you set up your estate plan. If you rely on a DIY service to address your estate matters, you risk not having your goals and wishes met. You may end up not protecting yourself and your family, or even create a situation that leads to probate litigation and necessitates court resolution of issues relating to you and your estate.
At Peterson Law Offices, your first consultation is always free of charge, which makes it easy for you to get information about Arizona estate planning from an experienced and knowledgeable lawyer. Attorney Shane Peterson assists clients with wills, trusts, and other essential documents.
We take pride in providing high-quality services at affordable prices. We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler.
Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.
© 2019 Peterson Law Offices, PLLC