How Wills And Trusts Are Different From Each Other
A will is a death document, and it only becomes effective at your death. Anything in your estate that is not set up to bypass probate will go through the probate court system. So, there’s not an issue about “putting assets into a will.”
A trust, however, is significantly different. It is designed to bypass probate and keep your family and your assets out of the court system. Typically, I want to help you put all of your assets into a trust. However, some assets do not transfer to the trust.
Can A Will Or Trust Be Changed At Any Time?
Yes, a will or trust can be changed at any time. To change a will, you create a codicil to the will expressing the changes you want to make. The caveat to that is that any codicil to a will must be filed in the probate court with the will. It is essential to keep the codicil with the will to file both documents with the probate court. If the codicil is lost or misplaced, the original will governs the disbursement of your estate. This is not a problem if a person has a properly created estate planning portfolio where all documents are organized and instructions are left for the executor. Often, there are situations where the will is not kept in an organized way, and the codicil is not in the exact location as the will. This is disastrous for an estate plan.
To change a trust, you create an amendment to the trust, and the amendment is kept with the trust document. Again, there needs to be a well-organized estate planning portfolio so that the amendment is readily available to the successor trustee.
To understand how a trust works you need to know certain terms:
- Grantor – when you create a trust you are the grantor of the trust
- Trustee – every trust has someone who manages the trust, known as the trustee. You are the trustee of your trust
- Beneficiary – trusts are created to benefit one or more persons, known as the beneficiary. You are the beneficiary of your trust
- So, when you create a trust and transfer your property into the trust, you continue to manage your property for your own benefit. Nothing changes in your day-to-day life.
- But you don’t own the property, the trust owns it. At your death, therefore, you don’t own any property so there is nothing to go through probate
- Successor trustees – these are the individuals you name to manage your trust after your death. They also have the authority to manage your assets for your benefit should you become disabled because of an accident, illness, or old age. For example, when a person develops dementia, the trust can have a provision that allows a successor trustee to take over the financial management of the trust assets.
- This will help you avoid the expense and embarrassment of a court-ordered conservatorship or guardianship.
- Contingent beneficiaries – these are the persons you want to get your assets after your death. Your successor trustees manage your assets after your death and disburses those assets to the individuals you name as your contingent beneficiaries.
Can I Control Over Assets If I Put Them In A Trust?
You absolutely can keep control over your assets if you put them into a trust. The trust that I recommend is fully revocable and amendable. Any assets you place in the trust can be easily transferred out of the trust.
For example, you put your home into the trust. If you decide to sell the home, you sell it as you normally would but when you sign the deed for the sale, you are signing as the trustee of the trust instead of in your individual capacity. Special needs trusts are also an option.
Contact The Law Office of Harvey L. Cox Today
For details on how we can help you preserve and protect your assets, contact our law firm today. Call us at 866-799-2124 or send us an email through our website. We have offices in Waco and Round Rock, Texas.