What’s The Difference Between A Will And A Trust?

The number one question that I get as an Estate Planning Attorney is “What is the difference between a Will and a Trust?” Most everyone I meet with is familiar with a will due to either familial experience or social familiarity. Trusts are the new “wild card”, as they become more mainstream due to the popular social media videos discussing the benefits of creating one. But what is the difference? At its core, the primary distinction between a Will and a Trust is when they come into effect. A Will can only come into effect once someone has passed away, and has no effect while the person is living, but is a great option for instructing where you would like your assets to go once you’re gone. On the other hand, a Trust is operative from the moment you create it, and is a great tool for protecting your assets–and is easier to make changes throughout your life. To determine which approach best suits your needs, we must first lay out the differences between a will and a trust.

 

A Will Is Basically An Instruction Manual For After Your Death

A Will only comes into effect once someone has passed away. Your Will is just an instruction to the Probate Court and your family as to what you would like to see happen to your things when you pass away. You will select a “Personal Representative”, the modern term for “Executor”, who will be responsible for handling your affairs once you are gone. Selecting this person in advance is beneficial, as it will take the burden off of your family from trying to select someone to serve during their grief. Planning in advance will allow your family to immediately take action and prepare themselves ahead of time for this role. You will then select who your beneficiaries will be, or simply, who will inherit your assets. As life circumstances change, you may wish to change these designations. Wills are not as flexible as other Estate Planning mechanisms, and require specific legal requirements in order to be valid in Rhode Island and Massachusetts. You may change a Will, however, it will likely require executing an entirely new Will. Whomever you chose to inherit or serve in your Will, you take control of your affairs, as the alternative is to let the State decide what happens to them.

Once you have passed away, your beneficiaries must take your Will to Probate Court in order to take control of your assets. Your Will gets entered into public record, as Probate Court is an official Court proceeding, meaning anyone who chooses can view your Will, including those people whom you may have decided to leave out of it.

The driving factor that pushes most people towards Wills as their Estate Planning tool is the cost. Wills are cheaper to create than Trusts, as they are not as complex. Often, they are simpler as well, and may benefit a select number of people that may not own real estate or other assets. However, the cost you save when creating the Will may be insignificant when it comes to the costs of Probate Court. Typical Probate cases take anywhere from a statutory mandatory minimum 6 months to over a year to administer, and can cost anywhere from $3,500 to $10,000 to administer, depending on multiple factors. For many people, a Will is a great starting point, but it may not be the most comprehensive solution for accomplishing their Estate Planning goals.

 

Your Trust Is A Private And Flexible Estate Planning Tool

On the other hand, a Trust is more flexible. A Trust is a vehicle to hold your assets, like a treasure box. A Trust comes into effect as soon as you create it and place your first asset into the “box”. Once you place something into the “box”, it is protected from probate and saved for your beneficiaries to receive later on. You will name a Successor Trustee, similar to a Personal Representative, who will have the “spare key” to your treasure box. Upon your death, incapacity, or simple unwillingness to serve, your Successor Trustee can then step up and manage the assets in the Trust, whether they be bank accounts, investments, or real estate.

One of the biggest draws of a Trust for many people is the privacy it provides. Unlike a Will, a Trust does not become part of the public record through the Probate Court. Instead, the Trust remains a private document, generally accessible only to those involved in its administration and the beneficiaries entitled to receive information. This can be especially helpful for individuals with delicate family dynamics, as it allows them to maintain a level of privacy over their financial affairs and the decisions they have made regarding their estate.

Another major benefit of a Trust is the ability to create specialized sub-trusts and gifts. For example, you can establish a Trust that sets aside money for your grandchildren’s college education, provides for a loved one with special circumstances, or even provides for the care of your beloved pets through a Pet Trust! Trusts are extremely flexible and allow for the “breathing room” that a Will may not provide when life circumstances change. You can build specific instructions into your Trust to address your family’s needs, both now and in the future.

While Trusts are generally more expensive to create up front, the potential savings become apparent when it comes time to administer your estate. Trust Administration is less expensive than Probate, as it is not a court process, and can be completed more efficiently and faster than Probate. But I digress, Trust Administration is another option for continued service after a Trust has been executed.

 

An experienced Estate Planning Attorney in Rhode Island knows the difference 

…Between a Will and a Trust. The perfect option for you will depend entirely upon your situation and your assets, as every person is unique. A Will may be perfectly fit for one person but not suitable for another due to any myriad of reasons. Privacy, control, and cost matter differently to different individuals. No matter which is most important to you, we would be honored to help you find your perfect fit. Click the link below to schedule a call with me, Estate Planning Attorney Adrianna Pacheco, or Jill Santiago.