Wills and trusts are two common legal instruments of estate planning. A will is a legal declaration of an individual’s wishes for the distribution of their assets after they have died. A trust also provides for asset distribution upon death, but can also control assets during the client’s lifetime and can place parameters on distribution after death.One of the major differences between a will and a trust is that a will must go through the process of probate for the distribution of assets of a deceased person, whereas a trust that owns the assets at the death of the person making the trust, avoids probate of those assets because the “owner” of the assets is the trust that lives on after the death of its creator.
Probate for Wills
Probate is the legal process of validating that a will is genuine and legally binding. The probate court will then allow the executor to distribute the assets of the deceased among their legatees under the will, after claims and expenses of probate are paid. If a person has no will when they die, the probate court will decide, based on the laws of the state, who inherits the assets after the claims and expenses of probate are paid.. An Illinois estate planning attorney can advise individuals on state laws and how to draft a will that will ensure their wishes are followed after death as opposed to a determination under state law.
To avoid probate and minimize the amount of estate taxes, many people choose trusts. The long and sometimes costly process of probate can interfere with the operation of a business that was owned by someone who has passed away and can cause significant delay in the distribution to loved ones.
Different Types of Trusts
There are two primary types of trusts. A living trust (also known as “inter-vivos”) is established while the individual is alive; a testamentary trust is established after the person has died and is set forth in a will.
If a living trust is “revocable,” the grantor can regain control of the assets and change or cancel the trust at any time. A living trust can also be “irrevocable.” The grantor is then unable to make changes without consent of the beneficiary. There are many complicated types of trusts that benefit individuals in specific situations. An estate planning attorney can advise business owners on the best course to protect their heirs and ensure their company can continue operating without complications should anything happen to them.
Updating Wills and Trusts
Insurance policies and some other financial accounts may take precedence over wills. In the event of divorce, individuals should review their estate plan. They may wish to change the executor. An estate planning attorney can notify individuals if they need to update their trust for legal reasons. It is a good idea to review all estate planning documents every few years to be sure everything is up to date.