Just the word trust can evoke a bit of anxiety in some who are making an estate plan. Don't be misled — a trust is just as easy to create and use as a last will and testament if not more so. Read more about how trusts work and see how trusts are superior to a will in many ways.
What Is a Trust?
A trust, in simple terms, is simply a plan for dealing with a person's assets after death. The trust may be irrevocable or revocable. As you might have guessed, an irrevocable trust is a lot more difficult to change after it's created. Revocable trusts, on the other hand, offer the owner a great deal of flexibility and ease when making updates. To help you visualize what a trust does, picture the trust as a file drawer holding information and instructions about all estate assets. A trust, therefore, may apply to real estate, bank accounts, vehicles, jewelry, investments, and more. If that sounds a lot like a last will and testament, a trust is so much more than that with powers that greatly exceed that of a will.
Trusts and Probate
Wills must be probated, but trusts do not. Not only that, but the assets held in a trust are also exempt from probate. Even if an asset is mentioned in a will, the same item mentioned in a trust overrules that provision. For example, if you mentioned a vehicle in your will and named one of your children as the beneficiary, the vehicle would go to another person if their name was mentioned in the trust as the beneficiary of the same vehicle. That is not just a quirk of estate law — it allows people to avoid probate by placing assets in a trust rather than a will. If you list an item in both, the trust prevails.
Trusts Are Quicker
Another way a trust is superior to a will is the time factor. Probate is an expensive, lengthy process but a trust can be opened within weeks of a death. Death certificates are often issued about two weeks or so after a death. Once the death certificate has been issued, the trust may be opened and the beneficiaries can get their assets.
Trusts Are Private
Wills are public and anyone curious enough can see the contents of a will. Trusts are not only private to the family; they are also private in their entirety. That means the beneficiaries only know what their part of the trust contains and not that of anyone else.
Speak to an estate planning attorney to learn more about trusts.