Minnesota Estate Planning: What’s The Difference Between A Will And A Trust?
As an estate planning lawyer, I hear this question often – I mean a lot – so want to take a few paragraphs and provide you with a simple explanation of the difference between these two valuable estate planning tools.
Number 1
A crucial difference between a will and a trust has to do with when each goes into effect. A will goes into effect only after a person’s death. To be clear, a will HAS NO USE during your lifetime. That’s because the very point of a will is to instruct others how to divide up your property after your death.
On the other hand, a trust takes effect the moment it is signed. As such, a trust can be can be used to distribute property during you lifetime, at your death, or even years later. There’s a reason trusts are considered using a “hand from the grave” to direct things.
The moment the trust is created the person who has been designated “trustee’ takes legal title to property for the benefit of another person or persons, known as beneficiaries. Unlike a will, trusts control property at the time the transfer is made and do not require death to act as a trigger UNLESS, of course, the trust says otherwise. Keep in mind that, in most cases, YOU will be the trustee of your trust while living. You won't be giving up access/control over trust property during your life unless you want it that way.
Number 2
Wills and trusts also differ in the property they may control. A will can only be used to manage property that is in the name of the deceased at the time of his or her death. A will can't direct the distribution of property held jointly with another or over which there is a beneficiary designation.
A trust only exerts control over items that have been directly transferred into the name of the trust. Once an item or group of items have been transferred to a trust, the trust then “owns” that property and its authority extends only over those specific items.
Number 3
Another crucial difference between wills and trusts is that using a will means your estate will pass through the Minnesota Probate process. So, the court will have some (depending on the type of probate action) control over the distribution of assets according to the terms of a will, ensuring that the document is valid and that assets are properly handled.
Trusts, on the other hand, pass property outside of the probate process so a court does not oversee the distribution process. Assets held in trust can be distributed to beneficiaries after the death of the grantor without any fees or interference from the court - making the process cheaper and shorter. Another benefit of avoiding probate is that unlike wills, which are public record, trusts remain private.
Pros and Cons of a Minnesota Will or Trust
Both wills and trusts have advantages and disadvantages that should be discussed with an experienced Minnesota estate planning and probate attorney. Though it may be confusing, creating an effective estate plan does not have to be an overly complicated process.
Minnesota Estate Planning Lawyer
Call Unique Estate Law today at 952-955-7623 to speak with an experienced Minnesota estate planning lawyer who can help walk you through the process of establishing or updating a will or trust.