Estate planning can be confusing. The endless rules, exceptions, and fancy terminology are to blame. If you want to create an estate plan, where do you start? What do you need? Do you need a trust? Would a last will and testament be sufficient? Hopefully, I can help you begin to understand the differences between two of the most important estate planning documents: A last will and testament (last will) and a revocable living trust (trust).
The best way to differentiate between a last will and a trust is to understand how they differ. Most importantly, unlike a trust, a last will does not avoid probate. The purpose of a last will is to choose who will receive your assets after your death. A last will allows you to give different portions of your estate to your spouse, family, friends, or even charities. Upon your passing (many years from now), a court would review your last will and oversee the distribution of your assets pursuant to your last will. This process is called probate.
A last will differs in other ways too. For example, in your last will, you can appoint guardians for your minor children and provide directions as to final arrangements. In addition, a last will differs from a trust because it does not go into effect until after your death and, if probated, is filed publicly. We often advise creating both a last will and a trust for the above reasons.
How is a trust different from a last will? The primary purpose of a trust is to avoid probate (which we highly recommend). A trust, unlike a last will, goes into effect immediately. Upon the creation of a trust, we begin transferring your property into the trust (don’t worry, you still retain control of your assets). This way, upon your passing, you technically do not own assets—your trust does. The trust then distributes your assets to whomever you chose to receive them: a spouse, family member, friend, or charity.
Ultimately, these documents serve the purpose of transferring assets to your family and friends. If we can help you create a last will or trust, please contact us at Ross@RossSpanoLaw.com or (813) 244-7758.