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There are different approaches to estate planning (i.e., will-based planning versus trust-based planning) that may seem overwhelming to understand key distinctions and nuances involved. A frequently asked question in estate planning is, “what is the difference between a will and a trust?” Below we will briefly describe the similarities and differences between these two documents:
A will is a legal document that spells out an individual’s wishes regarding the distribution of one’s assets and affairs and becomes effective after their death. The most common type of will which is known as a “testamentary will,” states how an individual desires for their affairs and assets are to be administered. Common elements of a will include a list of assets, persons named to receive such assets, and sometimes naming a guardian of the decedent’s children.
It is important to note that a will must be filed with a court through a process is known as a “petition for probate” or “probate.” After an individual dies, the will is petitioned in court, typically by the personal representative of the decedent’s estate to be examined and administered in accordance with the provisions provided in the document. Notwithstanding the foregoing, probate can be lengthy and expensive, especially if contentious family members and beneficiaries are involved.
Unlike a will, a properly established trust may become effective upon its creation. A trust is a legal entity that may be established to manage an individual’s assets during their lifetime and after their death. After a trust is created, the grantor typically transfers assets to the trust to be managed by a trustee in some cases for their benefit or for their beneficiaries. The most common type of trust is a revocable living trust. This trust can be changed or revoked during the life of the grantor who created it. Conversely, an irrevocable trust is one that its terms cannot be modified, amended, or terminated without the consent of the grantor and all of the beneficiaries. Common elements in a trust include provisions regarding its management and distribution of income and principal and termination provisions.
A key difference between a trust and a will is that a trust is not subject to probate which may be more efficient and provide substantial cost savings for managing an individual’s estate and affairs after their death.
Can you have both a Trust and a Will?
Yes. You can have both a trust and a will. Though both instruments accomplish different objectives, it is important to work with an experienced professional to ensure that either document is properly drafted to provide a comprehensive estate plan to preserve your legacy for your family and loved ones.
At Waugh Grant, our attorneys are well-experienced and versed in the various aspects of estate planning. We take a collaborative approach with each client to help determine the estate plan best suited for you and your family so that you can have peace of mind.
Contact email@example.com today to schedule a free estate planning consultation.