The Main Differences Between A Will And A Living Trust
Both a will and a living trust are intended to accomplish the same end result. That is, to enable a person at his or her death to leave his or her property to the beneficiaries he or she wants to receive it.
However, on the way to that end result, the operation of a will and a living trust are quite different. These differences are highlighted in the questions and answers below.
When Does a Will Become Effective?
A will does not become effective until a person dies. So if you have a will and become mentally incapacitated during your lifetime, your will is ineffective to determine how your property will be managed and how you and your family will be provided for.
When Does a Living Trust Become Effective?
A living trust is created by a person during his or her lifetime. It becomes effective when the trust is signed and property is transferred into the trust. The person who has control of your trust property during your lifetime is the trustee. If you are the creator of the trust, typically you would also be the trustee and retain full control over your trust property. But if you become mentally incapacitated during your lifetime, your trust names a successor trustee to step into your shoes. Accordingly you are in control of who will manage your assets during the remainder of your lifetime and provide for you and your family.
Does a Will Have to Go Through Probate?
Yes. All wills have to go through probate. Probate, among other things, is a proceeding where a court determines that your will is valid. Banks and other financial institutions will not allow your accounts to be transferred to the beneficiaries under your will until the court has issued an order that the will is valid. Likewise, a title company won’t permit the transfer of your real estate to your beneficiaries until the court has issued an order that the will is valid.
Does a Living Trust Have to Go Through Probate?
No. The only assets that have to go through probate are assets that are owned in your name. With a living trust, even though as trustee you continue to control your assets, legally they are owned by the trust, not by you. Accordingly, when you die, the successor trustee can transfer the trust property to your beneficiaries without having to go through probate.
Why is it Difficult for Someone to Challenge a Living Trust Document?
A living trust document is generally challengeable for the same reason wills are challengeable. To contest a will or a living trust, it has to be proven that the person creating it wasn’t of sound mind or that it was signed because of undue influence, duress or like. In the case of a will that goes through probate, probate, like any other court proceeding is open to the public. Therefore, your will is open for the public to see, and if people who review it are not happy with the terms and want to challenge it, the probate court creates a forum in which they can file a lawsuit to contest it.
On the other hand, a living trust does not go through probate and its terms remain private. Since outsiders who might want to challenge do not even have a right to have the trust furnished to them and to read it, it becomes much harder for someone to challenge it than a will.
Do Most People Have Both the Will and the Living Trust?
If people have planned using only a will, then they would not have a living trust. But if people have planned using a living trust, then they would also have a will. That is because at death, the trust will only distribute assets to the trust beneficiaries that are owned at death by the trust. So if the creator of the trust overlooked putting some of his or her assets into the trust, there also needs to be a will that leaves those assets to the trust. This will is referred to as a “pour over” will because it pours over any assets the trust creator neglected to put into the trust during his or her lifetime into the trust at his or her death.
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