One of the best ways that we can help protect our assets and provide for loved ones is to create a will or trust. The former is a legally enforceable document in which individuals can state how they want their assets to be distributed upon their deaths. Trusts, on the other hand, actually involve the creation of a separate legal entity, which holds a person’s assets until they are distributed to a third party. Wills and trusts both come with their own advantages and disadvantages, so if you are thinking about the estate planning process, you should speak with Alan G. Orlowsky, an experienced Chicago estate planning attorney who can help decide whether a will, trust, or a combination of the two is best for you.
Date of Implementation
One of the most important differences between a will and a trust is when the estate plan goes into effect. Wills, for instance, only go into effect upon a testator’s death. Trusts, on the other hand, take effect as soon as they are created. This difference has important repercussions, as it means that trusts can actually be used to distribute a person’s property before death, at death, or at a later date, depending on the trustor’s wishes.
Extent of Coverage
Wills can only govern how certain property is distributed, namely assets that are in the testator’s name at the time of death. This means that a will cannot address assets that pass to a beneficiary by contract, such as life insurance. Living trusts, however, can distribute any property with which they have been funded, including jointly owned assets and insurance policies.
Degree of Control
While creating a will or trust ensures that to some degree, people are able to distribute their assets as they see fit, trusts often give individuals even more control over their property. For instance, a trust can actually require that a beneficiary use an asset for certain things, like education or homeownership, or that funds only be delivered in a certain way or at certain times.
Another important difference between wills and trusts is that all property subject to a will must go through the probate process. Property that is owned by a trust, on the other hand, will avoid probate when the person who created the trust passes away. The probate process itself comes with its own benefits and drawbacks. It is, for instance, known for sometimes being costly and causing significant delays when distributing an estate. There is also no privacy in probate, as the process requires the filing of a person’s will with the court, which means that it will eventually be made available to the public.
Call Today to Learn More About Wills vs. Trusts
The best estate plans usually involve the use of both a will and a trust. How those plans work together, however, will vary depending on a person’s financial circumstances. To learn more, please contact the experienced Chicago estate planning lawyers at Orlowsky & Wilson, Ltd. Attorneys at Law by calling 847-325-5559 today.