A Last Will and Testament typically serves as the foundation of an initial estate plan to distribute estate assets. A trust, however, can also be used to distribute estate assets after your death. Moreover, a trust can also be used to help achieve a multitude of additional estate planning goals in the meantime. The Coral Gables estate planning attorneys at Stivers Law explain the difference between a Will and a trust and help you decide which one you should use to distribute your estate.
What Can a Last Will and Testament Do for Me?
A Last Will and Testament is a legal document that communicates your final wishes pertaining to possessions and dependents. Your Will allows you to make both specific and general gifts. For example, you might make specific gifts of your second home along with $250,000 in cash to your daughter. You could also gift a percentage of your estate to a beneficiary. For example, you could gift half of your entire estate to each of your two children. Your Will is also where you will appoint someone to be the Executor of your estate. Your Executor plays a vital role in the probate of your estate after your death. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone. Executing a basic Will ensures that your wishes will be honored and that your estate will not be administered using the state’s intestate succession laws.
What Can a Trust Do for Me?
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor, and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place.
A trust agreement is the legal document that creates a trust. Assets held in the trust are distributed by the Trustee according to the terms of the trust. When used to distribute estate assets after the death of a Settlor, the trust terms will tell the Trustee when to distribute assets and what assets to distribute to which beneficiaries.
Is a Will or a Trust a Better Choice?
You should discuss the unique facts and circumstances relevant to your estate with an experienced estate planning attorney before deciding to switch from a Will to a trust as your primary method of distribution in your estate plan. In the meantime, however, learning some of the advantages to relying on a trust to distribute your estate assets may be helpful, including:
- Avoiding probate. Assets held in a trust are not required to go through the probate process. Therefore, those assets will bypass probate and can pass directly to beneficiaries much faster.
- Privacy. Because a trust agreement is not part of the probate of your estate, the terms of your trust remain private. Therefore, gifts made using a trust agreement can remain private as well.
- Gifting to minors or spendthrift beneficiaries. If you are concerned about leaving a lump sum to a young and/or inexperienced beneficiary, a trust agreement allows you to stagger the inheritance you leave that beneficiary.
- Incapacity planning. The terms of a Will do not become relevant until the death of the Testator; however, the terms of a trust can apply in the event of incapacity as well as death.
Contact Coral Gables Estate Planning Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about choosing between a Will and a trust to distribute your estate, contact the experienced Coral Gables estate planning attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.