Many of my clients ask, “What is the difference between a will and a trust?” Here is the short answer; a will is a set of instructions to the probate court judge on how an estate is to be handled. A trust, on the other hand, is an agreement that can hold title to its maker’s assets on its own. Therefore, when the trustmaker dies there will be no court involvement because the deceased person does not technically own anything, their trust does. A will requires probate court whereas a trust does not.
During the lifetime of the trustmaker(s), the trust is revocable, amendable and items can be freely transferred in an out of the trust. At the death of the trustmaker(s) the trust becomes irrevocable and its terms are set in stone in regards to who and how property is to be inherited.
Trusts are especially useful for those who wish to leave property or assets to their children but do not wish do so without conditions. Money left in trust is far easier to protect and manage thereby ensuring it is used correctly. For those with minor children this can be especially important because money left to minors can be managed by the trustee who is separate from the person appointed as the guardian, thus minimizing the opportunities for waste and financial abuse.
A trust is typically coupled with several other documents including: 1. A healthcare directive that appoints an agent to make healthcare decisions for someone who is incapacitated and 2. A durable power of attorney that appoints an agent to make financial decisions for a person who is incapacitated. When coupled with these documents in a comprehensive plan, a living trust often prevents the need for a court ordered guardianship over an adult, a process that be painful for the incapacitated adult and the guardian.
The takeaway for today is that a living trust does three things: 1. Avoids probate court and keeps estate administration in the privacy of the family, 2. Allows for greater flexibility in leaving the estate to heirs and 3. Avoids the need for an adult guardianship when the trustmaker(s) become incapacitated.
Chris Morgan is a licensed Utah attorney practicing elder law in Lehi. He can be contacted at (801) 874-5644 or http://www.elderlawutah.com.