A common question our VP/Trust Officer, Tim Purintun, receives is, "What's the difference between a trust and a will, and why would I use a trust?" While you may already know about a will, trusts are becoming an increasingly popular estate planning vehicle.
To answer this question, Tim believes it is first important to define the difference between a will and a trust.
"A will, in addition to typically being the simplest and least expensive estate planning device, is really just a set of instructions outlining to the court how you would like your assets distributed when you pass away," explains Tim. However, some individuals may prefer using a trust, such as a revocable living trust, instead of a will as the primary document for their estate plan. Tim goes on to say, "With a trust, you simply transfer your assets to the trustee, and the trustee then manages the assets according to the terms of the trust document, without any court supervision. You can be your own trustee, as is typical in a revocable living trust, or you can name any individual or financial institution, such as CorTrust."
According to Tim, there are two main advantages to a trust: privacy and control. A will is filed with the court. This means any person can go down to the courthouse and look at the will, as well as the property descriptions of all the property in the estate. However, a trust is typically not filed with the court and typically not open to public inspection. This is beneficial when you are trying to keep your estate plan private.
The second advantage allows you to put provisions in your trust that allow you to control your inheritance to your beneficiaries. One provision you can apply is an age requirement to receive their inheritance, such as distribution amounts at ages 25, 30, or 35 years old. Another option is to control how your gift is spent by beneficiaries, such as allocating the funds for your beneficiaries' education or living expenses. "A trust can have any number of conditions which ensures that any inheritance is used for the purposes you intended, and not wasted," says Tim.
As you can see, there are benefits to a will and a trust that should be considered before having either document drafted on your behalf. If you are interested in learning more about each option and discovering which is best for you, contact Tim today or your local branch.