A will and revocable trust allow you to pass your financial assets to the next generation. However, each planning strategy has different benefits that may allow you and your family to meet your estate planning goals. This blog will allow you to have a better understanding of both so that you can begin thinking about which is best for you.
What is a will?
A will is a legal instrument that stipulates how a person’s belongings, whether real property or personal property, will be distributed after the person’s death.
What is a revocable trust?
A revocable trust is simply a contract between the creator of the trust (grantor or settlor), the trustee (individual or entity that manages the trust assets), and beneficiaries of the trust.
Most people assume that they do not have an estate plan if they do not have a will. However, everyone has a plan in place that is created by the statutes of the state that you live in. When the state determines who receives your assets, your true wishes may not happen.
If you would like to determine who your asset pass to, then you need to have a will in place. Even though there are other ways to plan, such as payable on death accounts or transfer on death accounts, having a will in place ensures that your assets go to the person or charity that you wish.
After you turn 18, it is important to get a will as soon as possible. Unfortunately, we do not have a crystal ball that tells us when we are going to die, so the sooner the better. It’s also important to get a will while you still have the capacity, i.e., you know what you have and who you would like to give what you have to.
A trust does more than determine where your assets go after your death.
First, a trust allows the trustee you picked to manage your financial affairs according to your instructions even if you are incapacitated.
Second, if your trust is fully funded, only one document goes through Probate (the Pour-Over Will). This simple document tells the court that your trustee is overseeing the process. Your trustee will distribute your assets according to the terms of your trust without delay.
Also, assets left to your loved ones in trust (by the terms of your own trust) may be creditor protected.
You are always in control of your assets and health unless you become incapacitated. At that time, the people you hand-picked will deal with your assets and health the way you have instructed within the terms of your trust. The trustee has a legal fiduciary obligation to abide by your trust. If you aren’t incapacitated, you can change your trust or even discontinue it.
Third, Trusts are difficult to contest. Your privacy is preserved because trusts are not public documents.
Key Differences Between Wills and Revocable Trusts
- Only in effect after your death
- Does not avoid probate
- Can be used by your trustee if you are determined to be incapacitated
- Avoids probate
- Allows you to determine how your assets are distributed, even after you die, i.e., to incentivize beneficiaries to work hard, to provide for their health, education, and support
Do you need a will or trust?
If you, and your state’s laws, would like to determine where your assets go after you pass, then you need a will or trust in place.
If you have a trust do you need a will?
Yes, you need a pour-over let the court know that the trust exists.
Does a will override a trust?
No, the pour-over will should not supersede the trust. A well-drafted will should work in conjunction with the trust, not negate the trust’s terms.
Do You Need To Speak With A Lawyer About Estate Planning?
If you need to speak with an experienced estate planning lawyer please contact us online or call our Virginia Beach office directly at 757.490.3500 to schedule your free consultation. We have offices throughout Virginia including Chesapeake, Newport News, Norfolk and Suffolk.