Having an estate plan is essential to ensure your assets are distributed according to your wishes. Two ways to accomplish this are with either a will or a trust. As estate planning attorneys, we can explain the difference between a will and a trust, and help you understand which option is best for you.
An advantage of having a will is you get to choose who benefits from your estate.
According to Dave Ramsey’s article, The Importance of Having a Will, nearly 70% of Americans die without a will, which can create a burden for the surviving family members.
What is a will?
A will goes into effect after a person dies. It lists the assets owned by the deceased and his or her wishes to distribute them among the named beneficiaries. Most people also name a legal representative to carry out their wishes, called an “executor.” This person handles the entire probate process. If an executor is not named, an administrator is appointed by the court.
What property can I include in my will?
A will covers only assets that you own at the time of death, and can include real estate, checking and savings accounts, vehicles, jewelry, artwork, furniture, etc.
What is probate?
After someone dies, probate is the process of settling an estate under the court’s supervision. Essentially, the estate is frozen until a judge determines:
- 1. The will is valid
- 2. Beneficiaries are notified
- 3. Property is identified and appraised
- 4. Creditors and taxes are paid
- 5. How the total remaining property is to be distributed
What does an executor do during probate?
In general, the executor oversees the final affairs outlined in the will. The first step is filing papers with the probate court to prove the will is valid and lists the assets, debts and beneficiaries. The executor manages the assets during the probate process and if there are outstanding debts that exceed the assets, the executor may need to sell some items to pay off the debts.
How much does probate cost?
In Ohio, court fees generally cost around $250. There are attorney fees, and the executor or administrator is also paid a fee. Appraisal fees are based on the appraised items, and accounting fees depend on the assets.
How long does probate last?
Depending on the size of the estate, probate can last anywhere from a few months to more than one year.
Do all wills need to go through probate?
If a will transfers ownership of assets from the deceased to living beneficiaries, probate is required. For small estates, there are simplified versions of the probate process that take less time and cost less money.
Do I need to hire an attorney for probate?
Probate can be a complex process and may include legal documents, court hearings, asset appraisals, transferring assets to beneficiaries, discharge of the executor, and more. If you are an executor of a loved one’s will, having an estate attorney available to assist you will ease your workload and give you the peace of mind that probate goes smoothly.
What if there is no will?
If a person dies without a will there are interstate succession laws that distribute property to the closest relatives. In addition, the probate court will appoint an administer to oversee the distribution of assets.
What is a trust?
A trust outlines the ownership and management of property. It goes into effect as soon it is created and can distribute assets and property before or after death. In this arrangement, there is a “grantor” who creates the trust, a “trustee” (can be the grantor, a bank or law firm) who holds legal title to the property or assets, and one or several “beneficiaries.”
What is a revocable trust?
When a trust is revocable, also known as a “living” trust, the person who set up the trust can undo or revise it at any time. Once he or she dies, however, the trust automatically becomes irrevocable. The word, “living” refers to the fact that a trust is in effect until death.
What are the benefits of having a living trust over a will?
When deciding between a will or a trust, consult with a professional estate planning attorney for help. We can explain the advantages of each option so you can determine which one is right for you.
Trusts do not require probate.
Since a court doesn’t oversee the trust process, there is no need to go through the sometimes lengthy and potentially expensive probate process.
Trusts cover you while you are alive.
One benefit of a trust is it covers you while you are still alive. It can outline how to specifically manage assets if the you become seriously ill or otherwise incapacitated, where a will only goes into effect upon death.
Trusts are private.
A third benefit of a trust is you can maintain your privacy. Wills are public records, but only the trustee (or trust maker’s successor), the named beneficiaries, and other pertinent people, see a trust.
What property can be included in a trust?
A trust maker can transfer any property or assets into a trust. Titled property must be in the name of the trust, however, not the trust maker.
A smart way to protect your beneficiaries and your assets is by creating an estate plan. If you were confused about the difference between a will and a trust, hopefully this article provided valuable insight to help get you started. Our will, trust and estate attorneys can answer your questions and help you determine the best way for your wishes to be carried out.