1. Some trusts are irrevocable yet a will can be revoked at any time. A will becomes active when the testator dies, therefore an individual may rewrite or revoke his or her will at any time, even at the very end of his or her life. However, when it comes to trusts, estate planning offers two specific options: revocable and irrevocable. A revocable trust, much like a will, can be altered at any point during the trustor’s life (assuming mental competence). While a revocable trust can be amended, an irrevocable trust serves as a legal instrument that cannot be changed. There are advantages and disadvantages to each type; some individuals may find closure in knowing that their wishes may not be altered under any circumstances while others may want to keep the door open to potential changes as they journey through the seasons of their life.
2. Your heirs may avoid the probate court process if you utilize a trust – a significant advantage. With a trust, the assets in the trust are immediately transferred to the trustee upon the death of the trustor (also known as the “settlor”) and probate is avoided. Additionally, while it is unusual for a trust to be contested, in the event that there is a legal dispute, it would be unlikely that the assets would be frozen until resolution. When a will is contested, the court generally freezes all assets until the matter is settled. This scenario can be avoided through the establishment of a trust.
Furthermore, assets placed in a trust are immediately accessible to the trustee whereas assets left to beneficiaries of wills cannot be formally distributed until the probate process has been completed. Probate is a court-supervised legal procress wherein the court manages the distribution of a deceased person’s estate – and it is a process, which makes demands on both the time and finances of your heirs. An estate is composed of all the assets, debts, and claims, pertaining to the deceased. If the deceased had a will, the court will interpret the will to ensure that all debts and claims are resolved and that any remaining assets are distributed as intended by the decedent.
3. The assets in a trust can be easily added, removed or sold, without having to rewrite the trust. Once a trust has been established, and throughout the trustor’s lifetime, usually only a signature is needed to make changes to the assets held in the trust; for instance a home in the trust’s name may be sold and new one purchased. This allows for ease and flexibility not found in a will. However, accurate record keeping is essential when managing a trust as any failure to place an asset in the name of the trust prior to death may leave said asset subject to probate. While wills can certainly be changed and amended (usually through codicils) usually the same formal procedure must be followed with each change to ensure that it will be considered valid upon death.
4. Wills are a matter of public record that must be filed with courts whereas a trust is a private document. Privacy is very important to some individuals, most especially if they have a large amount of assets to bequeath – and the desire for privacy extends to their heirs. Since wills are public documents available upon request to virtually anyone approaching the court, the names of heirs along with specific amounts of money and assets also become a matter of public record. While the law varies from state to state with regard to notifying “heirs-at-law” of the existence of a trust upon the death of the trustor, as well as the identity of the trustee, at no point is it required for a trust to be recorded and become a matter of public record. Even in the rare event that a trust is contested in a court of law, the details of the trust should remain undisclosed.
5. Creating a Will is initially less expensive than creating a Trust. However, the money initially saved while opting for a will may wind up being spent in probate court. On the other hand, while the draft of a solid trust may be a relatively expensive endeavor upfront, it is unlikely that more expenses will be incurred. While there is not a set fee for probate costs, each appearance and filing along with the other expenses of legal administration can, in some cases, quickly add up to exceed the cost of establishing a trust.
It is important to note that wills and living trusts are not necessarily mutually exclusive; some individuals choose to incorporate both legal instruments.