Key Differences in Wills and Trusts
Key Differences in Wills and Trusts
Having an estate plan is incredibly important, regardless of your goals, family situation, or net worth. Well-designed estate plans may include a will, a revocable trust, or sometimes both. Now, what are some of the differences in wills and trusts?
Wills
Your will becomes a governing legal document upon your death. It allows you to direct what happens to your assets by naming beneficiaries and indicating the assets or share of assets that each is to receive. In a will, you nominate a Personal Representative (“PR” or Executor), and you may also nominate a legal guardian for your minor children if they should be left without a living parent. The will is submitted to the probate court where the probate process is a structured, transparent (public) series of steps that take place under the supervision of the court. Your nominated PR may be an individual or a corporate fiduciary and, once appointed by the court, will have the responsibility and authority to shepherd any assets that you own in your name through this proceeding.
PR responsibilities include:
- Preparing an inventory and accountings for the court and the beneficiaries
- Collecting assets
- Paying debts and expenses
- Distributing assets per direction in the will
- Preparing and filing your final personal income and estate tax returns as well as any post-death fiduciary tax returns
A will has no power during lifetime, and does not address what happens to your assets (or to you) in the event of your incapacity.
Trusts
A living trust, sometimes referred to as a revocable trust or revocable living trust, is a legal vehicle that gives someone the responsibility of holding and directing assets on behalf of a beneficiary while they are living.
A revocable living trust is active upon signing, and serves some of the same, and some different, purposes than a will. You may design your plan to fund your trust upon your death, or you may fund it during your lifetime. You may serve as your own trustee or name another individual or trust company to serve as trustee or successor trustee.
A key difference between a PR and trustee is that you may name a trustee to serve during your lifetime in the event of your incapacity or if you simply prefer not to serve. Your trustee’s management can include helping you manage your assets and finances, paying your bills, maintaining your property, and preparing and filing your income tax return(s). Otherwise, your successor trustee will assume the role upon your death and settle your trust following steps similar to those in a probate proceeding. However, outside the supervision of a probate court, the trust settlement stays private and among the named beneficiaries.
Although you cannot name a legal guardian for your minor children in a trust, your trustee may manage trust property for any minor beneficiaries (or adult beneficiaries for that matter) until they reach the age of majority or for so long as you direct in your trust document. The flexibility of a trust plan is especially beneficial for those who may have a blended family, family members with special needs, or unique, substantial, or complex holdings.
Our Estate and Trust Settlement Team is experienced with wills and trusts and offers probate and trust settlement services. Services includes serving as PR or trustee. We are an impartial third party and will work with your beneficiaries throughout the post-death settlement process, as well as with your trusted legal, tax, and investment advisors. With three locations throughout the state of Wisconsin, we can deliver local, personal service.
Looking to name Fiduciary Partners in your estate plan or learn more about wills and trusts? Contact us today.
Friday, June 18, 2021
Categories: Insights