Are Trusts and Wills Interchangeable?
Wills and trusts are estate planning tools. A trust is set up to provide legal protection to the creator’s assets. It allows the Trustee appointed by the creator to take major investment, healthcare, and other decisions on behalf of the Testator should they become physically or mentally incapacitated.
A will is a written document that contains the creator’s instructions regarding distribution of assets. A will comes into effect after the creator’s death, whereas a trust comes into effect the day it is created. Wills and trusts serve a common purpose; to ensure the assets held under the estate are distributed according to the creator’s wishes.
When creating their estate, many people think they either need a trust or will. This is not necessarily true as there are several differences between the two. Living trusts avoid probate, trusts usually can’t. While the differences can be nuanced, a reputable estate planning attorney in Santa Rosa will help their clients take the correct actions.
Why Create a Trust?
Probate is a court-supervised proceeding in which a will is proved in a court of law. Probate is a time-consuming and expensive process. Moreover, probated wills are a matter of public record, which means anyone can review them. If you want to protect your privacy, it makes sense to create a trust.
Trusts do not go through probate. The trustee of a trust makes decisions on the creator’s behalf after they die or become incapacitated. A trustee should manage the trust efficiently. They can hire experts to assist them administer the trust. They cannot use the property for their personal gains, must file tax returns, and keep accurate records.
When Can Setting Up a Trust Be Advantageous?
Setting up a trust could be advantageous if
- You have a large and complex estate
- You want to avoid probate
- You want to protect your privacy
Reasons to Write a Will
Certain assets such as retirement plan accounts including 401(k)s, IRAs, and profit-sharing plans cannot be transferred to a trust.
A testator can use their will to nominate a guardian for their children. There is no mechanism in a trust to designate guardians for minor children. A will can be revoked any time before the death of the estate creator. Whether or not a trust can be revoked will depend on its type. A revocable trust, for example, can be revoked anytime during the lifetime of the testator, whereas an irrevocable trust cannot be revoked in most states.
Trusts usually need more maintenance than wills. Anytime you acquire a new asset or receive an asset as a gift, you need to update your trust. Wills typically need less maintenance and should only need to be updated three to five years.
The Johnston & Associates Law team consists of expert estate planning attorneys in Santa Rosa. We have years of experience creating effective customized estate plans. To learn more, call (707) 545-6542.