Will vs. Living Trust: Knowing What Is Best For You
December 14, 2012 Posted By Jenna E. Elkind Complex Litigation
There is often confusion as to whether you should have a Will or a Revocable Living Trust as your estate planning vehicle. This article will provide an overview of the major differences between a Will and a Living Trust and how these documents can help in the disposition of assets after death.
A Will is a signed and witnessed written document that sets out how your property will be distributed at death. It is revocable and can be amended at any time during your lifetime. Wills are amended by codicils, which must meet all the same requirements of a Will and must be executed with the same formalities. Often it is more practical to just do a new Will.
A Will does not have any value for property management while you are still alive. If you become physically or mentally incapable of managing your affairs, a court-appointed guardian must be sought to manage your assets. This process is court-supervised and can be burdensome and costly, especially if there is a contest or controversy regarding your capacity and distribution of assets. A Will allows you to appoint a guardian for your minor children and set up a Trust for your children that will dictate at what age the children will receive the assets and appoint a trustee to manage the assets of your children.
At death, the Will has to be probated through the court, which can be a lengthy process. Once the court approves the executor named in your Will to act, the executor is responsible for legally administering the estate according to the Will, often with court supervision. If the Will is contested, the estate is often placed under court supervision until the lawsuit is over.
An executor must give notice to all known creditors of the decedent. The executor must attempt to find all potential creditors of the estate with due diligence and notices must often be filed in a local newspaper to notify any unknown creditors of the proceeding. Probate proceedings are open records and are open for anyone to see. An executor must file an inventory of assets, which is also public record.
If you own real property in multiple states, a separate probate proceeding must be filed in each state. A state where you live will not have jurisdiction to probate real property in other states upon your death.
Most importantly, your distributees or those who would inherit your assets if you died without a Will according to New York State law will be invited to contest your Will even if they are not mentioned in your will.
A Revocable Trust can avoid some of these difficulties while providing some of the same benefits as a Will.
A Living Trust, also known as an Inter Vivos Trust or a Revocable Trust, is a contract which provides lifetime and after-death property management. You usually serve as your own trustee and can appoint a successor trustee in the event of incapacity and upon death. In a traditional Revocable Trust, you, as the grantor of the Trust will usually retain the right to manage the Trust assets as you wish. If you are no longer able to manage the Trust due to incapacity, the successor trustee you designate can step in and continue to manage the Trust without court intervention. Management of a Trust as a successor trustee is generally much simpler than management of a disabled person’s assets through the use of a Power of Attorney. Since the Trust is a contract, the grantor can determine what criteria will be used to determine disability.
Unless there is a dispute, the operation of a Trust is usually outside the court’s jurisdiction. A Revocable Living Trust is designed so that Trust assets are not part of the probate proceedings. The distribution is private and not part of the public record.
Trust contests are possible, but much less common and more difficult than Will contests. Additionally, trust assets are usually not immediately frozen once contested as are estate assets that pass through probate.
It is extremely important to remember that a Trust must be funded with assets before it can effectively serve to manage your assets. This means that you must transfer all assets you want to pass under the Trust into it before your death. One of the major benefits of a Trust is that you may transfer real property owned in multiple states into the Trust. The real property will then not need to go through probate to pass to your beneficiaries.
Creating a Will is sometimes simpler and a less time consuming process during your life. If you do not have any assets in other states, do not think that there will be a Will contest, have a power of attorney, and do not mind that your estate administration goes through the court, a Will may be right for you.
However, if you worry about privacy, handling of your assets in the event of incapacity, have real property in more than one state and do not want your assets to go through probate or expect a challenge to your Will, you should consider a Revocable Living Trust.
There is more to consider than what this article can cover. For any questions, please contact Jenna Elkind at email@example.com or Moira Casey at firstname.lastname@example.org. French & Casey LLP specializes in estate planning, estate administration and estate litigation. We would be glad to help you navigate the estate planning process.
 Note that you can designate a person or persons you want to act on your behalf in the event of incapacity in a Power of Attorney.
 A “pour-over” Will is always recommended with any Trust creation. A “pour-over” Will provides that all assets which are not in the Trust at the time of death (and thus subject to probate) are poured over into the Trust as a result of the probate process. This takes care of any assets inadvertently left out of the Trust during your life.