It’s easy to feel overwhelmed by legal lingo when it comes to creating an estate plan. There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable living trusts, testamentary trusts, special needs trusts, and more. But what even is a trust – and what is the difference between a trust and a will?
Types of Estate Plans
In Texas, there are two types of estate plans: one is based on a will, and the other is based on a revocable living trust (RLT). Both documents are designed to establish (1) who you want as your beneficiaries, (2) how you want them to receive your assets after you pass away, and (3) who will be in charge of overseeing this process. However, the two documents are not as similar as they sound, and in fact there are some key differences between a trust and will.
Where There’s a Will
A will is a legal document that only goes into effect after you have passed away. It is meant to outline the testator’s (the person who makes the will) wishes for the distribution of their property and assets. While a will is helpful to settle a loved one’s estate, it must be brought to the probate court for a judge to determine whether the will is valid or not. The trusted helper named in a will (the person who usually must go to probate court and oversee the giving of your property to your beneficiaries) is called an Executor. When a will undergoes the probate process, it is recorded by the state and becomes public record. Assets or items in the will can’t be distributed until the probate process is complete.
An Expression of Trust
Unlike a will, a trust is a legal document that goes into effect as soon as it is signed. A will provides instructions on how to distribute property, whereas a trust transfers a grantor’s (the person who makes the trust) property to an account to be managed by another person. Much like a contract, the provisions of a trust dictate what should happen to your assets in the event you either (a) become incapacitated or (b) pass away. Meaning, you (as the grantor) can place your money and property into the trust. You can also act as the trustee and manage the trust while you are alive, but there are also people named in the trust document who can step into help should you ever become incapacitated. Additionally, your trust can continue to own and manage your assets after you pass away, and the trust can pay money out to your beneficiaries (meaning children, grandchildren, family members, friends, or charities). This gives you the ability to exert some control, even after you have passed away.
Lastly, sometimes having a trust can help simplify or avoid the probate process entirely. This is because the trust has instructions how assets will be distributed after your death. Even if there does need to be a probate for your estate, the trust document does not become part of the public record, meaning that your estate can be handled private from the court at the time of your passing.
Weighing Your Options
You don’t need to be a lawyer to understand the difference between a will and a trust – but an experienced estate planning attorney can help you decide which document is best suited for you and your family. So whether you have a plan that needs an update, or have never written an estate plan before, our attorneys would be happy to help determine which plan is the best fit for you. Nielsen Law PLLC provides family-focused estate and business planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information, and to learn about our firm, please contact us. We look forward to working with you.
