Estate Planning Attorney Tips: Understanding the Differences Between Trusts and Wills
Estate Planning Attorney Soriano Talks Trusts vs. Wills
When it comes to planning for the future and protecting your assets, it’s important to understand the differences between a trust and a will. These two legal documents serve different purposes, and choosing the right one for your situation is crucial. This post explores trusts and wills and how an estate planning attorney can help you protect your legacy.
What is a Trust?
A trust is a legal arrangement in which a person, known as the settlor, transfers ownership of their property to another person, known as the trustee, to hold and manage for the benefit of a third party, known as the beneficiary. A trust may have multiple settlors, trustees, and beneficiaries, and may be created for the benefit of individuals or organizations.
The trust document, also known as the trust agreement or trust instrument, outlines the terms and conditions of the trust. This includes the purpose of the trust, the property being transferred to the trust, the duties and responsibilities of the trustee, and the rights of the beneficiary.
Why Estate Planning Attorneys Use Trusts
There are many reasons to create a trust. Here are some of the most common:
- To manage assets for the benefit of the beneficiary.
- To avoid probate.
- To reduce taxes.
- To protect assets from creditors.
- To provide for the care of minor children or individuals with disabilities.
- To achieve other specific objectives.
Types of Trusts
There are many different types of trusts, allowing great flexibility when creating an estate plan. Some common types of trusts include:
- Testamentary Trusts.
- Living Trusts.
- Charitable Trusts.
- Special Needs Trusts.
- Trust Funds.
Each type of trust serves a different purpose and has its own set of rules and requirements. Working with an estate planning lawyer will ensure you are using the right trust for your goals.
Revocable or Irrevocable
Trusts can either be revocable and irrevocable. A revocable trust allows the settlor to make changes to the trust or to terminate it at any time. Conversely, a settlor cannot modify or terminate an irrevocable trust once it has been created.
What is a Will?
A will is a legal document that specifies how your property is distributed when you die.
When writing a will, you can choose to leave your property to anyone you wish. In Oregon, there are some statutory limitations. The “elective share,” for example, gives your spouse the right to claim part of your estate. You can choose to leave your property to your children, other family members, friends, or even charitable organizations. A well-written will is controlling and will ensure that your property goes where you want it to go.
Requirements for a Valid Will
Oregon law dictates the validity of a will. A valid will requires:
- The testator is at least 18 years old.
- The testator is of “sound mind.”
- The will is in writing.
- The testator signed the will or directed another person to sign it in the presence of witnesses.
It is important to work with an experienced estate planning attorney to ensure that your will is legally valid.
Dying “Intestate” or Without a Will
A person who dies without leaving a valid will has died “intestate.” Dying intestate results in the State controlling the distribution of estate property. In Oregon, intestacy laws are voluminous and complicated. A few examples of intestate estate property distribution:
- Married with no children: All property that is in your name alone will go to your spouse.
- Married with children from a prior marriage: Half of your property will go to your surviving spouse and the other half will go to all of your children.
- If you have no will or any family: Your property may go to the state of Oregon.
Does a Will Avoid Probate?
If you die with a valid will, your estate will still likely have to go through probate. Probate is the process of settling a deceased person’s estate, including distributing their property in accordance with their will. The total value of the estate and how property is titled determines whether an estate will have to go through probate. However, a will can help lessen the burden of the probate process and reduce the overall cost.
Key Differences Between a Trust and a Last Will and Testament
Trusts and wills are two unique legal documents. While they both further the purpose of your estate planning goals, there are real differences between the two.
First, a trust takes effect immediately, while a will only becomes effective after the testator’s death. This allows the trustee to manage trust assets and make decisions regarding the beneficiary during the settlor’s lifetime. With a will, the personal representative may only manage estate assets in accordance with the will after the testator’s death.
A settlor can customize a trust to meet specific goals, including avoiding probate. A trust can also be more flexible and discrete than a will.
There are still many, many more differences between trusts and wills. Working with a knowledgeable estate planning lawyer can help you understand these differences more completely.
Which is Better: A Trust or a Will?
A Question for an Estate Planning Attorney
So, which is better – a trust or a will? The answer depends on your individual circumstances and goals. If you want to retain control of your assets during your lifetime and after your death, then a trust might be right for you. However, if just want to provide direction for the distribution of your assets in a simple and straightforward manner, a will might be the better option.
The real question is whether a will or trust is better for your unique situation. Working with an estate planning attorney is the best way to answer this question.
Consult with an Estate Planning Attorney for Best Results
Don’t wait to protect your assets and ensure your wishes are carried out. Call Soriano Law now to work with a knowledgeable estate planning attorney who can help you choose the right planning documents for your situation. Our team is dedicated to helping our clients reach their goals and will work with you to identify the best tools to do so. Call us today to schedule a consultation.