I have always wondered what the difference is between a Will and a Trust? Can you explain in a straight- forward way?
– Trustworthy in Trilogy
Dear Trustworthy in Trilogy:
When you execute a Will or Trust, you put your wishes on paper (as opposed to having nothing in writing at all (e.g.: “intestate”)). The main difference between a Will and a Trust is that a Will goes through the courts. A Trust, on the other hand, can be handled by the Trustee, often without court intervention. A court generally gets involved with a Trust if an asset that should have been put into the trust was accidentally left out (and the court has to authorize the release of funds). Or, a Trustee can find themselves in probate court if, for example, there is claim of undue influence, malfeasance by the Trustee, etc. (e.g.: warring family members).
In most circumstances, a Trust is a great vehicle to transfer wealth to heirs because courts are expensive and the dockets are back-logged. For example, the attorney and executor fee is typically ~3% of the gross value of an estate. If your house is valued at $500,000, the executor and attorney would receive $15,000 EACH for the probate. This doesn’t count other assets in the probate. Our courts are back-logged, and getting things approved and distributed can take many months, even years. Trusts have saved my clients quite a few headaches!
In this video I talk about “What’s The Difference Between A Will And A Trust?“.