What Is the Difference Between a Will and a Trust?

Knowing the difference between a will and a trust – trust vs will – can be incredibly helpful when you have lost a loved one. It can be complicated when your loved one has either of these documents or, even worse, none of these documents.

In this post, we’ll discuss what trusts and wills are, their potential benefits, and what you need to consider in order to facilitate the future administering of the estate.

What Is a Will?

A last will and testament is a legal and official document that indicates how your properties and assets will be distributed after your death and may help avoid disputes between your family members.

You can use a will to:

• Leave assets to those who could be otherwise excluded by the law. It determines how your properties will be distributed after you die.
• If you have dependents left behind, you may leave instructions for their care.
• Designate a legal guardian or conservator for your minor children or dependents.
• Nominate an executor who is responsible for carrying out the instructions and wishes outlined in the testament.
  
• Leave your whole inheritance to just one beneficiary or assign various assets to multiple beneficiaries.
• Gift money or assets to your favorite charity or an institution or organization (other than a charity).

After your loved one has passed away, the estate may need to go through probate, which is the process of validating the will. It is essential to understand who has been nominated in the will as the Executor.

Once they have begun the probate process, the probate court may appoint the Executor to act on behalf of the estate. The assets that are included in the estate may be distributed to the designated beneficiaries only after the probate process has been completed.

What Is a Living Trust?

A trust is a legal arrangement where an individual (also known as a grantor, trustor, or settlor) places their assets in the care of a third party (trustee) for the benefit of another person (beneficiaries).

When a trust is created, the document will typically include details about:

• The purpose of the trust.
• Type of assets that could be held in the trust.
• The trustee’s responsibilities and duties.
• The designated beneficiaries who will receive the trust’s assets when the settlor passes away.

As the next step, the testator must fund the trust and can do this by transferring the assets into the trust’s account.

This is where our firm has seen the disadvantage of creating a trust.

Many times, there are assets that have not been titled into the trust. This causes the deceased’s loved ones to have to go through probate and administer the trust, which can cause twice the amount of work.

Typically, the assets that could be included in a trust are:

• Financial accounts (checking and saving bank accounts, investment accounts, retirement accounts, annuities, certificates of deposit, shareholders stock from closely held corporations.
• Business interest.
• Real estate.
• Life insurance policies.
• Collectible vehicles.
• Mineral rights.
• Safe deposit boxes.
• Valuable personal property, such as art, jewelry, furniture, and collectibles.

There should be a trustee listed in the trust documents to carry out the trust’s wishes and administer it. We recommend contacting our office if you need assistance with understanding or administering the trust.

Types of trust

Even if trusts could have different forms, each of them with its own benefits, here are the most common ones you should be aware of:

Revocable trust

Can be changed or canceled by the trustor during their life, allowing them to maintain control over the trust and their assets. The settlor can also add or remove assets and change beneficiaries if they change their mind.

Upon the grantor’s death, the revocable trusts become irrevocable trusts.

Irrevocable trust

It cannot be amended, modified, or terminated without the trust’s beneficiary’s permission or by a court’s order. Once the grantor adds assets to the trust, he gives up control over them and can access them only if they meet certain conditions.

Special needs trust

It is a legal arrangement that allows people with disabilities to receive financial support from a trust for a particular purpose without affecting their rights and eligibility for public assistance and federal support.

Charitable trust

This is an irrevocable trust and is created to support different charities and, if applicable, to offer tax benefits to the grantor.

Testamentary trust

This is a special trust created as a part of the last will and testament, where the trustor transfers assets into the trust upon their death. A testamentary trust can have minors as beneficiaries, and the assets will be paid out to them only at a certain age.

In their will, the settlor may create a testamentary trust for each beneficiary and split the inheritance equally or create a family trust that can be distributed according to each beneficiary’s needs.

Because the testamentary trust is a part of your loved one’s last will and testament, the probate process may need to occur in order to properly administer the estate.

Advantages and Disadvantages of a Will

Pros:

• It uses simple language.
• The deceased may have left instructions regarding their preferences for their final arrangements.
• The will directs the family to their loved one’s last wishes.
• It allows the deceased to leave their property to specific individuals. Without a will, the heirs of the deceased would receive their estate.
• It allows the deceased to leave their estate to charities if they wish.
• The will nominates an Executor(s) to administer the estate.
• The will may specifically disinherit individuals that your loved one did not want to receive from their estate.
• If the deceased had minor children, the will may also nominate a guardian for the children, ensuring that they are adequately cared for.

Cons:

• The will must be validated by the probate court through the probate process before distributions can be made to the beneficiaries.
• Creditors will be able to file a claim against the estate if probate is necessary.
• If the deceased owned real estate in multiple states, the probate must be completed in all states.
• Interested parties may attempt to file an objection to the will.
• If the deceased owned assets that had beneficiaries designated on the assets, then the will may not have authority over those assets, as they may be considered non-probate assets that are handled outside of the probate process. For example, insurance policies with beneficiary designation and real estate or land titled with other parties as JTWROS or real estate with joint ownership.

Advantages and Disadvantages of a Trust

Pros:

• If the trust is set up correctly and all assets of your loved one are titled into the trust, this may prevent the need to go through the probate process to distribute the assets to the designated beneficiaries. (It is rare that we have seen a trust that has been set up to include all of the deceased’s assets.)
• It allows the deceased to direct their loved ones to their final wishes and requests.
• If everything has been titled correctly and probate is not necessary, the process of distributing to the beneficiaries may be faster than the probate process.

Cons:

• If the deceased had a “pour-over-will” then the estate may still need to go through the probate process. A pour-over-will is a document that the deceased has created to request that all of the assets that were not titled into the trust should be transferred into the trust. To validate the pour-over-will, the probate process must occur.
• Trusts are more complex documents, and it is recommended to have a probate attorney help you understand how to administer the trust.
• The trust may require meticulous record-keeping, and it is essential to always keep an accurate accounting in case any interested party has questions at some point.
• Potential conflicts occur between the family members or beneficiaries, especially when they consider the trusts unfair or when the trustee is not acting in the best interest of all trust beneficiaries.

Trust vs Will in Georgia

In the state of Georgia, your loved one may have a trust or a will or both, depending on what their preferences were before they passed away. In either case, it can be difficult for the family to understand what to do next and how to understand these documents.

We can help you navigate that complicated process.

Who Should Choose a Will?

Our firm recommends that everyone have a Last Will and Testament.

It is an important document to have that directs loved ones into how to handle the deceased’s last wishes.

If the deceased has not left a will then the distribution of the estate will be left to the direct next of kin, which may not be what the deceased had intended.

For most people, making a will would be typically the fastest, easiest, and most affordable way to plan and distribute their inheritance.

Is it Possible to Have a Will and a Trust?

In short, yes. In Georgia, your loved one may have left a will or a trust.

A last will and testament helps to ensure that your loved one’s assets will be distributed to the nominated beneficiaries and not according to intestacy law.

If the deceased has minor children or dependents, there may be a guardian named in the will for them.

On the other hand, when the deceased has left a trust, and it is titled correctly for every asset, then probate may be avoided, which can help settle the estate more quickly.

However, our firm has seen in many situations that the trust has not been set up correctly, which can cause the family of the deceased to have to do twice the amount of administrative work.

Bottom Line

In conclusion, if your loved one has left a will, a trust, or neither, our firm can help you understand what your responsibilities are regarding the estate and assist you in the administration.

Schedule a consultation or call us at (770) 796-4685 to speak with one of our team members about your specific situation. Our experienced probate attorneys are always here to help you.

Disclaimer: The information above is provided for general information only and should not be considered legal advice. Our probate attorneys provide legal advice to our clients after talking about the specific circumstances of the client’s situation. Our law firm cannot give you legal advice unless we understand your situation by talking with you. Please contact our law office to receive specific information about your situation.