Both wills and trusts are legal documents that provide instructions about how an individual’s belongings are managed. While trusts go into effect upon creation, wills only go into effect upon the death of an individual. They have unique differences in the way they direct the management of the assets of the deceased. What works best for your particular estate depends on a variety of factors. This post is just an overview of the pros and cons of wills and trusts. For a more detailed consultation about your specific situation, contact a Lovelace Law estate lawyer to talk through the options.
A will is a legal document that takes does the following:
- provides instructions regarding the distribution of a deceased individual’s assets
- designates an executor to carry out that person’s wishes as described in the will
- Instructs the executor how to manage financial affairs of the estate
- protects assets
- informs survivors about how to administer an estate
A will transfers title for property that has title. However, wills must go through probate first in order for the title to legally transfer. Most of the time in Texas, once the will is filed with the court, a hearing will appoint the executor who will then work with the court to send required notices and file the required inventory, accounting and list of claims. In other words, a court order is necessary for transfer of title with a will. That court order is the purpose of the probate process.
A will doesn’t require any management, but it requires a court order that comes from probate. Wills are best for simpler estates.
A trust is a legal document that gives a designated trustee the power to distribute your assets without going through court. When you’re establishing the trust as part of your estate planning, the trust needs to own all the property that will be transferred. Essentially, the trust becomes its own entity at creation. In fact, a revocable trust can be funded immediately or at death. It can also be used to appoint someone to manage affairs if the settlor becomes incapacitated later.
If the designated trustee is living, there is no probate necessary to transfer the title of all the property within the trust. The court doesn’t have to be involved because the document itself instructs the process. Unlike probate, which is public, the administration of a trust is a private matter between the deceased, the trustee, and those mentioned within the instructions of the trust.
The downside of a trust is that it has to be managed, both before and after the settlor’s death. Because it is its own entity, it must file taxes as such. The plus side is that probate court is not required for the transfer of title. Trusts make the most sense when there is a lot of property involved, or if that property exists in multiple states.
If you’re still unsure whether a will or a trust is best for you, schedule a free consultation with one of our Fort Worth or Burleson attorneys who is familiar with Texas estate law.