When you hear about estate planning you often hear that Arlington Heights estate planning lawyers do “wills and trusts.” You may read about a will being probated, a trust is formed, and the benefits of both. But what are the differences between these, and why do they seem to be so intertwined all the time?
What is a Will?
A will is quite simply a document that describes who will get your property, or what you want to happen to your property when you pass away. You can add some other directions to a will as well, like excusing any debts that may be owed to you or naming an executor of your will.
An executor is a person who actually executes the will. In other words, this individual makes your desires, as stated in the will actually happen. An executor does the following:
● Pay taxes
● Pay debts
● Distribute property to whomever you have designated
● Transfer money to whomever you designate
Although you make a will when you are still alive, a will doesn’t become effective, that is, nothing listed in the will actually happen until you pass away.
What is a Trust?
A trust is different, although a trust also can say who will get what when you pass on. Instead of an executor, as would be the case with a will, a trust designates a trustee, which can be a person or a company. Your property is transferred into the trust, when or around the time the trust is made. You may have to entitle certain property, to designate the trust as the owner.
Note that distributions from the trust can happen even before you pass away if that’s what you want to happen. There are tax advantages and asset protection advantages to having trusts distribute while you are alive as opposed to when you pass.
Unlike wills, which you can change at any point before you pass away, trusts can be revocable or changeable. You can also have an irrevocable trust which will not allow you to alter the terms of the trust.
Trusts also have the advantage of allowing you to plan. For example, if you leave $1 million to a relative in your will, your relative will get the money when you pass. But with a trust, you could say that the money can only be paid when the relative graduates college, or has a child, or only so long as the relative takes care of your pets. You can choose whatever contingency or condition you want to set.
The trustee of the trust will ensure that your directives are followed, before distributing any of your funds. An Arlington Heights estate planning attorney can help you draft trust language that is specific enough that the trustee knows exactly what you want to happen and when.
Because trusts avoid the in-court probate process, unlike wills, they often are better for people seeking some privacy.
You should note that a trust cannot do everything a will can, and vice-versa. That’s why most people who establish trust, will also have a will.
What estate planning method is best for you? call the Arlington Heights estate planning attorneys at Orlowsky & Wilson, Ltd. Attorneys at Law at 847-325-5559 today for help.