A trust is a document that creates a fiduciary relationship with the Grantor (creator of the trust) and the Trustee (person who manages the trust) to hold property. The trust is a set of instructions for the trustee to manage all assets named under the trust as instructed by the Grantor. A trust is an instrument commonly used in estate planning – it can be revocable or irrevocable and both have different uses. Most people use Revocable Living Trusts to hold their assets during their life-time and name Trustees (or order) to step on the Grantor’s choose and manage the trust as the Grantor has instructed in the event of an incapacity of death.
2What is a Will?
A Will is a document that indicates what the Testator (the person who makes the will) wishes to happen with his/her assets upon his/her death. A Will has to go through a process called probate (court process to transfer assets).
3What's the difference in benefits between a Trust and a Will?
There are many differences between a will and a trust, some of the most common are that a Trust is effective since it is signed while a Will will only become effective upon the death of the person who created it (the testator or grantor), and thus a Trust works through a grantor’s incapacity while a Will does not. A Trust allows the Grantor to manage his/her assets even beyond and incapacity or death, can designate who manages the assets and how. The Will does not. A Trust can avoid probate and a Will requires to go through Probate.
4Can I name guardians for my children in a Will?
Yes, you can name a guardian for your minor children in a Will, but a Will does not come into effect until you die. That means that if you are incapacitated for a short term or long term, that designation cannot be used. You should have separate designation of guardians for your children.
5Do I need a Probate if I have a Will?
Yes. A Will or Last Will and Testament only indicates who will be your heir or beneficiary and how much or what that beneficiary or heir will receive, but in order to transfer the assets, a court process called Probate is required.
FAQs - Probate
1What is probate?
Probate is the process by which the court validates the authenticity of a will; appoints an executor (aka personal representative); and supervises the settlement of an estate, including the payment of bills, filing of tax returns, and transfer of assets to beneficiaries. If no will is presented, the court will appoint an estate representative, called an "administrator." The administrator carries out the same duties as an executor; but when a person dies without a will the court must determine the heirs of the deceased. The complexity and duration of this heirship determination process varies from state to state, but typically the remainder of the probate process, such as the payment of taxes and bills, remains the same whether there was a will or not. Of course, estate assets are distributed to heirs at law as determined by the state's intestacy laws, not beneficiaries chosen by the testator (aka the deceased who created the will).
2How do I avoid probate?
Only assets in your individual name or payable to your estate will go through probate. Many folks use a (fully funded) revocable living trust to avoid probate. In addition, contract assets such as life insurance, retirement accounts, and annuities as well as assets owned by joint tenants with rights of survivorship avoid may probate as well.
3Is probate bad?
Many people, but not all, think so. The difficulty and expense of probate varies from state to state and from family to family because of differences in state laws, family goals and personalities, and assets. Many clients wish to avoid probate because it’s a public process, time consuming, and costly. We’ll take a look at your entire situation together and let you know whether a probate avoidance plan should be part of your estate plan.
4Why should I avoid probate?
Most people want to avoid probate because it can include high fees and costs, significant time delays and stress, and public dissemination of private information. What do I mean by public? In most cases, court records are public records, meaning that anyone could get a copy of your will, the estate’s inventory, and other information you might wish to keep private. The ease of accessing this information does vary from state to state, and sometimes even from county to county. Some places even have online dockets, allowing anyone with an internet connection to see a listing of your assets, debts, beneficiaries, and who got what. If you’re like most people, you want to keep your family affairs and finances private and avoid predators, etc., so probate should be avoided. Please note that in some instances, probate may be necessary to deal with creditors.