Wills and trusts are sometimes thought of as equivalent estate planning tools that do the same thing, only with different processes. There is an important legal distinction between the two.
When planning for their estates, many people consider whether it is better for them to get a will or a trust. Much of this consideration centers on the probate process because many people assume that wills and trusts do the same things.
People know that wills have to go through probate, while trusts do not. Therefore, if they do not want their estates to go through probate, they should get a trust. While it is true that ultimately wills and trusts can be used to do many of the same things, there is an important legal distinction between the two as the NWI Times discussed in “Estate Planning: Why wills must be recorded.”
A will is just a document with a set of instructions about how an estate’s assets should be distributed and who should be in charge of that distribution. For the instructions to be followed, they must be given legal effect. The only way that can be done is by going to probate and having a judge approve them.
A trust is a separate legal entity when it is formed. Instead of an estate having assets, they are transferred to the trust. A trustee is named to oversee how those assets are handled.
The distinction might seem like a minor one, but it can be critically important in some circumstances. The best way to know whether a will or a trust is better for you, is to see an estate planning attorney who can consider your individual circumstances.
Reference: NWI Times (Feb. 4, 2018) “Estate Planning: Why wills must be recorded.”