How wills and trusts differ in an estate plan

On Behalf of | Jul 6, 2020 | Trusts

People in Illinois who are creating an estate plan might wonder whether it would be better to use a will or a trust. A last will and testament takes effect when a person dies and names an executor to distribute property to beneficiaries and administer the estate. A living revocable trust is the most common type of trust, and it takes effect as soon as it is created. Assets can be moved in and out of the trust while the person is alive, and only assets that have been placed in the trust are passed through the trust.

A will must usually go through the probate process while a trust does not. With a trust, a person can also be appointed who will step in to manage person’s financial affairs if the person becomes incapacitated. A trust can also protect assets for minor children.

If a person has real estate in multiple states and beneficiaries for those assets are named in a will, the will usually has to go through probate in each state. This may be another reason a person might prefer to use a trust. An estate plan can use a trust to pass the majority of the assets and a will to appoint guardians for children and deal with assets not named in the trust.

Working with an attorney may help a person determine which document would be best for passing most of their assets. For example, if there is a family member with special needs who receives government assistance, getting an inheritance could affect that assistance. If it were placed in a special needs trust, the money could be accessed to help without affecting these benefits. If a person might not manage their inheritance responsibly, constraints could be put on distributions, or the trustee could decide when distributions are made.