Highly Effective Criminal Defense, Real Estate And Estate Planning
Attorney Bryan E. Cameron

How wills and trusts differ from each other

| Jul 30, 2020 | Uncategorized

People in New York who are creating an estate plan may wonder whether their main document should be a will or a trust. Although both are used to pass assets to beneficiaries, the two are otherwise quite different.

There are three different types of trusts. Revocable and irrevocable trusts go into effect upon their creation. Testamentary trusts are created by the individual who wrote the will, and like a will, they go into effect upon a person’s death. A living trust can be changed by the creator, or grantor, at any time. Irrevocable trusts generally cannot be changed, but they also offer higher levels of protection from creditors, taxes and other threats. However, an irrevocable trust also takes the property out of the control of the grantor and puts it in the hands of the trustee. A grantor can also be the trustee of a revocable trust but not an irrevocable one.

A will must pass through the public probate process before assets can be distributed to beneficiaries. Revocable and irrevocable trusts do not go through probate and remain private. A revocable trust can also provide safeguards if the grantor becomes incapacitated by the naming of a successor trustee to take over its management. Trusts can also hold and protect assets for years or decades. This can be helpful if there are minor children or irresponsible beneficiaries.

People who only need a will but want to make arrangements in case they become incapacitated may want to consider financial and health care powers of attorney. These documents appoint someone to take over a person’s finances and health care. Having a will alongside one or more trusts can be helpful for appointing guardians for minor children and placing all remaining assets in a trust if desired. An attorney may help a person determine the best vehicle for his or her estate planning needs.