Undecided whether your family needs a traditional Will or a Trust? We hope the information in this article will help increase your understanding of how each of these tools works.
Among the most common questions we get at BRESHEARS LAW is to explain the differences between Wills and Trusts. Well, the best way to start answering that question is to first define what we mean by Wills and Trusts.
What is a Will? Often called a Last Will and Testament, a Will expresses your final wishes.
What is a Trust? A Trust, on the other hand, is a long-recognized Legal Relationship between three parties. For many families, a trust can be a smart way to hold and manage their property. The three parties to a trust are the:
- Grantor – the creator of the trust relationship, sometimes called the trustor or trust maker;
- Trustee – who holds title to property and agrees to follow the grantor’s instructions; and
- Beneficiary – the person for whom the Trust was created in the first place.
More often than not, our clients begin as all three parties to this trust relationship – they are the grantors, the initial trustees, and the initial beneficiaries of their trust. As significant life events happen, their roles as trustees can transition to other persons they trust, who shoulder that responsibility in the grantors’ place. And, finally, there will be other beneficiaries of the trust, as the Trust functions like a Will distributing property to children, grandchildren, or other loved ones.
So now that we know what each of these tools is, how are they different? Here are a few, but not nearly all, of the ways Will and Trusts differ.
- Effective Date. We find that most people are surprised to learn that a Will is not effective when it is signed, but takes effect only after the maker’s death and after a probate court has examined and approved the Will. A Trust, on the other hand, is effective the moment it is signed and can accept and hold property from day one. That property is then managed according to the instructions you put into your Trust document.
- Privacy. Because a Will must be subjected to the legal process called probate, the administration of a Will is always very public. The whole world can find out who inherited what property from you. Administration of a Trust happens privately. The Trust survives you, so there is no probate required and your property passes to your loved ones privately, without the mandatory disclosures that are part of the probate process.
- Governing Rules. With a Will, your property is still subject to the government’s rules that require approval of the Will, involve a judge who appoints your executor, and the completion of the multitude of other requirements in the probate legal process. A trust operates under Your Rules. The person you appoint to oversee administration of the Trust is in charge not because a judge approved, but because you selected them.
- Protection from Disability. Without question the biggest difference between Wills & Trusts is how you and your property are protected in the event of a disability. Since a Will is not effective until your death, if you become disabled you will be relying on a power of attorney for finances to manage your property. For a number of reasons, many third parties (especially banks and other financial institutions) are reluctant to honor powers of attorney. If they don’t, the only alternative is to apply for a guardian of your estate to be appointed – a cumbersome and enormously expensive process.
Since a Trust owns the property it manages, your disability doesn’t cause a loss of continuity in the management of your property. Your Trust is not affected by your disability. Since you don’t hold title to the property in your name, there is no estate that requires a guardian to manage.
These are only a few of the many practical differences between Will and Trust planning. At BRESHEARS LAW, our proven estate-planning process is designed to educate and fully inform you on those differences, so that you can make the decision on which technique is best for your family.
If you have questions about whether a Will or a Trust works best for your family, we invite you to call us. We can help answer those questions for you, just as we have for clients and their families for more than 30 years. We are conveniently located in southwest Fort Worth, at the intersection of the Chisolm Trail Parkway and Edwards Ranch Road, in the Shops at ClearFork.
We hope that this vlog has served its educational purpose, but it is not legal advice nor a substitute for proper legal advice. So we encourage you to contact an estate planning attorney today to learn how to design a plan you deserve, from counsel you trust. That’s our mission and our desire for you and the ones you love. So thanks for reading and watching!
Check back here from time to time, for more answers to the questions you may be asking about protecting your family’s future. Until then, we pray God blesses you and the ones you love.
Founder & Principal Attorney