A will is a legal document by which a decedent's wishes are carried out; a trust is a similar document, but can be much more detailed and includes such considerations as taxes and residual income, age limitations, and other factors.
By writing and keeping an up-to-date will, one can ensure that his spouse, children, friends, or even pets will receive his estate according to how he chooses to disburse it. Generally, any type of item or property not specifically given to another will be included in the estate as a whole.
A will can and should state who receives what, as explicitly as possible; it should include who will be named as guardian for any minor children, or incapacitated adult children, if both spouses should die at or near the same time. In addition to any assets such as real estate, financial accounts, retirement plans, or investments, one should also detail who receives which personal items.
In many states, any property held jointly by a husband and wife will entail rights of survivorship at the death of either spouse. This means that, regardless of any statement in a will, one's spouse will inherit any real marital property unless, of course, a prenuptial or similar type of agreement has previously been signed by that spouse. Likewise, most states do not allow one to unintentionally disinherit his children unless that, too, is specified in the will as per named individual. Furthermore, many types of assets and accounts can be noted with a right of survivorship, or POD; in cases of joint ownership or partnership, only the portion owned by the decedent can be willed to another.
An executor will be named in the will, often the spouse or a close relative or friend; the individual should be someone who is financially and legally knowledgeable and who can be trusted. The executor is responsible for paying any outstanding debt and for disbursing property, money, and personal items. He may do this in a number of ways, depending upon the assets named in the will and the complexity of consolidating those assets.
Once a will has been drawn up and signed and witnessed, it must be filed with the probate court. This can be done immediately, or be kept with one's attorney until the time of death. A will must be probated, that is, filed with the probate court and determined by the judge to be valid and authentic; a judge will also rule on the executor and his plans to manage the estate. This is often done almost automatically, but can take up to a year or longer.
It's important to have a competent probate attorney draw up a will, to ensure that all legal angles are covered and no loopholes or potential errors are included. As with any official document, detail and specificity are necessary, but simplicity is often best. For larger estates, a trust document may be more indicated.
Often an individual will choose to have a will written in which certain one-time bequests are made, cash or personal property, and which also includes a reference to the trust document; this is done in conjunction with a trust. The trust itself will outline who receives what property, at what age or time, and how the income from the property is to be used. It is crucial to use a good attorney who will enable the logistics to be as simple, yet comprehensive, as possible.
A trust is usually indicated for larger estates or for those in which the assets are to be used for continuous income for one or more beneficiaries. There are many types of trusts, such as marital trusts (for the benefit of the spouse), remainder trusts, generation-skipping trusts (usually used to reduce taxes, i.e., to avoid certain inheritance taxes), and so forth. A good probate attorney can advise on which type is best suited for the particular situation.
Additionally, a trust can be created by the client for use during his lifetime; this is usually done by means of a revocable trust, that is, one in which the client can make changes at any time prior to his death. This is often done for tax purposes and to ensure that, if something untimely befalls the client, most of his arrangements are in place. Very seldom are irrevocable trusts created; this would lock the client into certain ventures and inheritance which may not be applicable at the time of death.
As an executor is named in a will to carry out the wishes of the deceased, a trust document will name a trustee; usually the client serves as his own trustee and names a successor to take over upon his death. Often several successor trustees are named, in case of unsuitability or predeceasing the client.
A trustee is responsible for administering the trust; he can make investment and sale decisions, keeps track of any income or other monies, pays the expenses of the estate, and make disbursements to the beneficiaries. He may or may not be paid for this work, as per the trust document.
One other important benefit of creating a trust versus a simple will is the ability to avoid or lessen probate. While a trust document is a valid legal agreement, the courts are usually only involved if a breach occurs or if the document is contested. The conditions of a trust take over at the time of death, without the need for a judge to rule on the contents.
The decision to carry out one's last wishes via a will or a trust document is a very personal one and depends mainly on the presumed value of the estate. A competent attorney can best advise on which document to use, and while a holographic, or handwritten, will is accepted in many states, one would be wise to retain the services of an attorney for either type.