Understanding the Difference Between a Will and Trust

Wills and trusts are two vital tools for estate planning, ensuring your belongings reach the right people and your wishes are carried out when your time comes. A carefully curated plan will give you peace of mind and make the process less stressful for your loved ones. If you neglect to create a will or trust, you will die intestate — without a will — and the state will determine how your assets are distributed.

Take control of your estate and your life by learning the difference between a will and trust and determining which one is best for you.

What Is a Will?

A last will and testament — or will for short — is a legal document you can create with instructions on handling your affairs when you pass away. The main purpose of a will is to specify the distribution of your estate, which includes money, investments, real estate, personal property, businesses and more. However, you can also use it to give sentimental items or keepsakes to those who may want them. Along with your estate and relevant assets, you can use your will to appoint a legal guardian for your children, explain what to do with your pets, donate money to charity and offer guidance for your funeral.

In a will, you are the testator and the people who receive your estate are your beneficiaries. You also need to appoint an executor, who carries out your wishes on your behalf after you pass. This person can be a family member, close friend or professional executor. Each state has different laws around wills, but most require you and two witnesses to sign the will for it to be legally binding.

What Is a Will?

Multiple types of wills are available, but most people opt to create a simple will and a living will. A simple will is exactly what it sounds like — a simple, uncomplicated document containing your wishes. You can create a joint will with your spouse or partner to combine your wishes into one document. A living will is slightly different, as it outlines your medical care preferences should you become incapacitated. This includes decisions around resuscitation, life support, pain management and organ donation.

What Is a Trust?

A trust is a legal agreement between two parties, namely a trust grantor — the person who creates and owns the trust — and a trustee — who is temporarily responsible for the trust on behalf of the grantor. Once you have set up a trust, you transfer your assets and ownership to the trust, which is a separate legal entity. The trustee will ensure your assets are distributed according to the requirements in the trust agreement, either after your death or anytime you choose, including while you are alive.

You can nominate either a person or an organization as your trustee, but they must act in the best interest of the trust and its beneficiaries. You could be the trustee yourself, but you’ll need to nominate a successor trustee to manage the trust once you pass. Because trusts are complex legal relationships, it’s best to enlist the help of a professional fiduciary company to help create, manage and execute them so it all goes smoothly.

The most common type of trust is a living trust, which you create while you’re alive. Conversely, a testamentary trust is created according to your will after you pass away. You can also choose a family trust to look after your family members and assets directly.

Trusts can be either revocable or irrevocable. You can alter a revocable trust at any time while you’re alive, while irrevocable trusts cannot be amended or changed. Most trusts become irrevocable when the grantor dies, but you can also make a trust irrevocable while you’re alive to prevent any changes.

Which Is Better — a Will or Trust?

While they seem similar, wills and trusts are different tools with their own pros and cons. One is not always better than the other but may be more suitable or helpful depending on your unique requirements and circumstances. To decide which is best for you, you must understand how they differ and use this to inform your decision. Consider these factors:

  • Cost: Trusts usually cost more to create and maintain than a will, simply due to their legal complexity. It is cheaper to manage a trust yourself, but it’s worth the extra investment to let a professional handle it for you.
  • Coverage: A trust only distributes the assets you transfer to it, such as financial assets or properties. Conversely, a will specifies what to do with all your assets and dependents and outlines other wishes you may have regarding your death or incapacitation.
  • Timing: Trusts allow you to distribute your assets to selected beneficiaries while you are still alive, while wills only begin this process after you pass.
  • Privacy: Trusts offer more privacy than wills, as wills must go through a public legal proceeding called a probate. Trusts bypass this process, keeping your estate and decisions more private.
  • Effort: Trusts involve complex processes and more paperwork to create than a will. This makes wills quicker and easier to create than trusts. In some states, you could even write your will on a napkin and sign it, although this isn’t recommended.
  • Control: Trusts are particularly beneficial for people with more assets and a higher-value estate as they give you greater control over their management and distribution. However, you also lose some control over your assets with a trust. Through a will, your assets remain under your control and ownership until you pass.
  • Speed: Trusts can wrap up much faster than wills as they skip the probate progress, which can be quite lengthy.

Can You Have Both a Will and Trust?

Yes, you can have both a will and a living trust at the same time. Sometimes a will is sufficient, but if you choose to have a trust, it’s recommended that you also have a will. However, a standard will can conflict with your trust if they both cover the same assets. This is where a pour-over will comes in — these wills work with living trusts to specify what happens with the possessions not included in your trust.

Plan Your Funeral With Joseph A. Lucchese Funeral Home

Creating a will or trust is one of the best things you can do to prepare for your passing and look after your family when you’re no longer able to. However, most people focus on the estate side of end-of-life planning and neglect other important factors. One thing you don’t want to overlook is your funeral and whether you prefer to be cremated or buried. While thinking of these things while you’re happy and healthy may seem strange, planning the process in advance will ensure you get everything important to you, help budget for it and take the stress off the people closest to you.

At Joseph A. Lucchese Funeral Home, we have the knowledge and experience to help you preplan for your funeral. We’ll meet with you free of charge to learn what your funeral wishes are, the event budget and structure and if you want guests to attend. No matter your religious background, we strive to document and carry out all your wishes as you intended. See what our past clients have to say about our compassionate and quality service.

We offer burial and cremation services and can supply everything to create a memorable and beautiful funeral event. Don’t hesitate to call us at 718-828-1800 if you’d like to chat directly with one of our funeral directors today. Alternatively, we’d love to see you in person at our office in the Bronx, New York.

Plan Your Funeral With Joseph A. Lucchese Funeral Home