There are so many differences between a Will and a Trust and their usefulness. Many books have been written explaining how and when to use a Trust instead of or in addition to a Will. One of the questions I get the most, “Do I have enough money to set up a Trust?” I follow up the question with a question like a typical lawyer and ask, “Why do want a Trust?”
A Will is a testamentary document, not effective until the day you die, it states how and to whom you would like your property distributed at your death. It provides instructions to the court and authorization to the person you appoint as Personal Representative to dispose of your personal property, your real estate and assets. A Will can also be used to establish a Trust after your death. There are a variety of reasons you may want to have a Trust created under your Will and is a discussion you should have with your attorney.
Joint accounts, payable on death accounts (POD), in trust for accounts (ITF) and accounts naming beneficiaries do not pass through your Will (or Trust) and go to whomever you have named to receive.
A trust is certainly useful when you die, but can also be very helpful while you are living. The use of a trust allows you to plan and provide instruction for just about anything. Depending upon your stage of life, there are a variety of reasons you may want to utilize a Trust. If you are younger it provides the opportunity for your assets to be held in Trust for your children upon completion of their education or a particular age. You can make the rules the way you want them. It was always important to me that each of my children have the opportunity for a college education and that my trust would not allow funds to be distributed until each of them had obtained their degree. Now they have all graduated and are working so it is time for me to update my Trust.
As I get older a Trust becomes more useful to me as it is a very seamless way of providing authority to a Successor Trustee to manage my assets and use the money the way I have stated for my care as well as anyone else I may care to include. I can specifically state how I want the funds used and ensure I still get all of items and services I like. It enables me to have a trust continue after my death and distribute money to my heirs the way I have stated.
Heads Up! A trust is not just to avoid probate. I have met many clients throughout the years who have been sold a trust and still end up with a probate proceeding because they had no idea their assets had to be titled in the name of the Trust. When you meet with your attorney you will want to make sure you state specifically what outcome you want so they can provide you recommendations and directions of how to make it happen.