Wills and Irrevocable Trusts
Both wills and irrevocable trusts are ways to transfer property upon your death. Whether one is better for your estate planning than the other depends upon several factors such as the size of the estate, potential death tax liabilities and whether or not pay out of the estate needs to be controlled, such as for someone who is handicapped.
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Wills
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Wills are documents created to determine the transfer of property upon death.
Trusts
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Trusts are created to transfer the legal ownership of your property while you are still living. The trust becomes the property owner, yet you still have use and control of it while you are alive.
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Revocable vs. Irrevocable Trusts
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With a revocable trust, you can make changes to it and even decide to remove property from the trust. With an irrevocable trust, once it has been set up, it is not possible to make any changes such as adding or removing property. For both trusts, if you set yourself up as the sole trustee, you can manage the property within the trust.
Wills vs. Irrevocable Trusts
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Your will, subject to your mental state, can be changed until the day you die. Once you have set up an irrevocable trust, you cannot make any changes. A will determines the disposition of your assets upon your death whereas the irrevocable trust continues to own the property after your death. You must name a trustee in the trust who will manage the assets after you die. This person will be responsible for distributing the property according to your written instructions.
Summary
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Trusts are often used to avoid probate, a process by which title to property owned by you at the time of your death is distributed to the beneficiaries. The process can be slow and very costly. With a trust, the property is owned by the trust and not by you. Therefore, distribution of your assets after your death, using a trust, can be less expensive. Whether you should use a will or an irrevocable trust should be discussed with an estate attorney.
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