Trust Administration Attorney

What Are the Differences Between a Will and a Trust?

As soon as you dive into estate planning, you will find yourself hearing more about wills and trusts. They are both mechanisms that you can use for distributing the assets in your estate. However, they function differently.

In this section, we will discuss how those estate planning tools differ from one another. You may also identify which one you need to create based on your circumstances.

Time of Implementation

First off, wills and trusts may differ in terms of when they take effect.

A will cannot  take effect until the person who created it passes away. Several years or even decades could pass between the date you wrote your will and when it becomes active.

Trusts do not need to function that way. You can set up a trust to distribute your assets after your children reach a certain age. It is up to you to decide the parameters for the trust’s effectiveness.

Probate Requirement

Probate is the process where a court determines the validity of a will before your beneficiaries receive their inheritance.

Notably, the probate process is only concerned with wills. If you decide to use a trust to distribute your assets, you can bypass the probate process completely.

Waiting Time

Your sudden passing may be difficult for your family, especially if you were the breadwinner for your family.

Going through the probate process could only exacerbate that problem. The probate process may take several months to complete. In some cases, it could keep going for over a year.

With your loved ones having no access to your assets during that time, they could end up struggling financially. You can save your family from that potential problem by using a trust to distribute your assets instead of a will. Your trust administration lawyer can also help speed up the distribution of your assets.

Cost of Creation

The cost of creation also varies for wills and trusts. Generally speaking, trusts are more expensive to create because they are more complicated.

Speak with an attorney about the expenses attached to creating wills or trusts. Check how big the difference in pricing is and decide if the extra cost of the trust is worth it.

Privacy

Another difference between wills and trusts is privacy.

According to the state of New York, any will that enters probate court immediately becomes a public document. If anyone is interested in looking up your assets, they can do that by examining your will.

Trusts offer more privacy. Since they do not need to be scrutinized in probate court, they can remain as private documents. You can effectively limit the number of people who know about your family’s assets by creating a trust instead of a will.

What Are the Different Types of Trusts?

After learning about the differences between wills and trusts, you may have decided to set up the latter. You can contact a trust administration lawyer today and start working on that.

Before doing that, you may also want to consider what your options are. There are different types of trusts available, and some of those options may suit you better than others.

Let’s go over some of the more common types of trusts below.

Revocable Trusts

The first type of trust you need to know about is a revocable trust. It is also often referred to as a living trust.

A living trust may contain provisions for all your assets, including your real estate properties. In there, you can state when your beneficiaries will receive their shares of your estate. That is an important detail if you still have children who are minors.

You can also use the living trust to indicate what kind of end-of-life care you wish to receive.

As you have guessed, changing a revocable trust is possible as long as you are still alive.

Irrevocable Trusts

What happens to a revocable trust after you die? At that point, it becomes an irrevocable trust.

Revocable and irrevocable trusts do not differ much in terms of what they may contain. They only differ in the sense that you cannot change an irrevocable trust once you create it.

Testamentary Trusts

Technically, testamentary trusts qualify as both wills and trusts. You create testamentary trusts by using a will, which takes effect when the person who wrote the will passes away.

Testamentary trusts are for people who still have young children. Use the testamentary trust so your children will only receive their inheritance upon reaching a certain age.

Who Should You Choose as a Trustee?

The trustee is the person who will be in charge of executing the terms of your trust. You must think carefully about who you choose to take on the role.

Many people opt to have a family member become the trustee. They do so because they trust that person completely and because doing so removes trustee fees from the equation.

If you would rather not have someone so close to you manage your trust, you can also hire someone to take on that role. You can hire a trust administration lawyer to become your trustee.

Forbes suggests naming co-trustees if you cannot settle on one person. Select a close family member and a lawyer as your co-trustees so they can maintain a balanced perspective on the matter.

Creating a trust can be a complicated endeavor. Allow us at the Alber Law Group to help you get started with that task. Reach out to us today if you’re interested in learning more about our trust administration services.