How Does a Living Trust Compare to a Will?

Trusts typically have broader uses than do wills.

A last will and testament is a document created during one's life that takes effect upon death and details who the deceased individual's property will go to. By contrast, a living trust, though also created during one's life, takes effect immediately upon its creation. The trust actually removes assets from the control of the trust's creator. Those with specific will and trust questions should see an attorney.

Wills

An individual, known as a "testator," creates a will during life so that once he dies, there will be no dispute over the ownership of his property. Once the testator dies, his estate executor has the duty to locate the will and dispose of the testator's assets according to his wishes. However, until the testator dies, the will remains legally ineffective. Therefore, wills are typically used exclusively as estate planning tools.

Trusts

Living trusts are essentially a tripod legal structure. The party disposing of his assets (the "settlor") legally transfers those assets to a trustee. The trustee's job is then to take care of the assets; although he owns them, he is truly holding them for the benefit of another (the "beneficiary"). According to the settlor's wishes, the trustee may be allowed or even obligated to distribute the assets to the beneficiary. Living trusts can facilitate estate planning, but many parties also use living trusts to protect assets from creditors or take care of the assets if the settlor should lose his mental capacity.

Creation

Individual state laws dictate the process required to create a will or a living trust. In most states, however, the procedures for both wills and trusts are similar. They must be written documents, signed by either the settlor or testator. Will execution typically requires two, or sometimes three, witnesses to the signing. Some states allow informal wills in extenuating circumstances, such as imminent death, but still require the testator to hand-write the important provisions himself.

Probate Consequences

One of the most significant differences between wills and living trusts is the applicability of probate. Probate courts approve and oversee the disposition of estates via will or inheritance. Wills must usually be probated, unless the estate at issue is extremely small. Before a probate court approves a will, it must be satisfied that the will is genuine and voluntarily executed. However, because settlors create their living trusts during life (leaving opportunity for the settlor to revoke the trust or declare it invalid), probate courts don't feel the need to validate a trust after the settlor's death. Consequently, living trusts typically do not require probate.

Revocation

Some living trusts are considered irrevocable, in which case the settlor needs the consent of all interested parties to the trust to revoke it during his life. If a trust is revocable, the settlor may simply terminate it at any time, but the trust becomes irrevocable upon his death. Revocation of wills can be accomplished by creating a new will that disposes of all of the same assets or by physically destroying the will in some manner recognized by applicable state law.

References

• "Wills, Trusts and Estates (Seventh Edition)"; Jesse Dukeminier, Robert H. Sitkoff, James M. Lindgren and Stanley M. Johanson; 2005
• LawFiles: Formalities of Wills
• The Free Dictionary: Legal Dictionary; Will
• AlaskaUSA: Protect Your Assets with a Trust Agreement
• MOBar: What Is a Revocable Living Trust?

Resources

• DIY Estate Planning: Revocable Living Trust