Everyone has heard of a will or a trust but many times the terms are used interchangeably as if they are the same. They are not. Both are tools that can be used when creating an estate plan however, both have different purposes and are used at different times.
One of the biggest differences between a will and a trust is that the will only comes into effect after you die. A trust is used both during your life and after your death. A will designates who you want to receive your estate after your death and designates an individual to carry out those wishes. A trust allows distribution of your estate during your lifetime, at your death or even at a later time. A trust is an agreement between the person who creates the trust (you) and the person who manages the trust assets upon your passing, or you while you are alive.
In many cases a will is used in conjunction with a trust. All property is held by the trust and a “pour over will” is used to ensure that anything which was mistakenly left out of the trust pours into the trust at the time of death. The “pour over will” also can be used to designate guardianship of minor children. If the will is used this way and set up properly it will not pass property through probate.
Every individual’s estate planning needs are different. For some a will is the correct tool, while for others a trust is necessary. This article should not be construed as legal advice. If you have questions about which is best for you contact an attorney that can assist you to make that decision.