On the most basic level, a trust and a will serve the same purpose. Both are inheritance instructions designed to aid your surviving family in distributing your property and assets according to your wishes, after your death. That’s just the basic level, though. When you delve deeper, there are some key differences between the two forms that it’s important to know, especially if you’re nearing retirement and trying to figure out how best to handle your estate.
As a Florida trust administration attorney, I often get asked whether it’s better to create a living trust or a will. Unfortunately, there’s no straightforward answer. The best option varies from person to person, depending on aspects such as age, wealth, and marital status. If you want to know which one you should choose, use this post as a starting place while also making plans to meet with a probate lawyer who can give you personalized legal advice.
How Does a Living Trust Work?
Some Floridians, especially those of the baby boomer generation, like the idea of creating a living trust because it allows them to keep their estate and assets from going into probate (the legal process of determining whether inheritance instructions in a will are valid or not) after their death. It also allows an appointed successor trustee to manage the estate while the creator of the trust is alive but incapacitated. For example, if you were disabled by an illness or accident later in life, your chosen trustee could manage any property you placed in the trust rather than having to go to court to gain control of the assets.
For a trust to work, an individual needs to designate assets to go in it. You could fund a trust in Florida with little more than a dollar if you wanted to, but if you owned other valuable assets that were not included in the trust, such as a house or a boat, those assets would still have to go through probate after your death, making the trust somewhat pointless.
Most people who choose to create a trust designate it as revocable, which means that the creator of the trust controls all its assets and can change the terms of the trust at any time during his/her life. It’s rarer for an individual to create an irrevocable trust, in which they essentially sign their assets over to a beneficiary and can’t make any changes without the beneficiary’s consent. This can get complicated, and irrevocable trusts are typically only used by the affluent in order to avoid certain taxes.
What’s the Difference Between a Trust and a Will?
If you want to see an in-depth comparison of living trusts and wills, NOLO has compiled a helpful table showing what each form can and can’t do. Some of the key differences include:
• Leaving property to young children: In the state of Florida, children under the age of 18 cannot legally own property, and property left to any beneficiaries under that age must be managed by an adult until the beneficiary comes of age. When you leave property to a child through a trust, your appointed trustee will automatically become the manager of the estate until the child reaches an age that you’ve chosen (although the child must still at least be 18). When you leave property to a child through a will, on the other hand, you have to specifically name an adult to manage their property until they turn 18.
• Probate: Assets in a will must go through probate, while assets in a trust do not. This means that if you create a living trust instead of a will, your assets can be distributed much more expediently after your death.
• Privacy: Your will becomes a public record after your death, but a trust remains private, allowing you to keep your affairs in your family.
• Personal Representative: In a will, you must name a personal representative who will handle your estate administration and distribute your assets to beneficiaries after your death. Instead of naming one for a living trust, you name a successor trustee, who can only manage property included in the trust. For this reason, many people create both a will and a living trust but name the same person as their personal representative and successor trustee.
• Ease of creation: Writing a will in Florida is relatively straightforward. In order to make it legally binding, you simply have to sign it in front of two witnesses and have those witnesses sign as well. Trusts can be a little trickier to create: they require the signature of a notary, and they also require you to transfer property into the name of a trust. For example, if the title for your car is in your name, you’d have to change that title to make your living trust the owner.
When Is a Trust the Right Choice for Me?
Trusts tend to take longer to create, require more work, and are more expensive to create than wills. For Floridians who are younger, in good health, don’t have a lot of valuable assets, or plan to leave the bulk of their assets to their spouse, there’s little reason to create a trust. Probate laws have been evolving, and there’s a good chance that probate avoidance will continue to get easier in the next few decades, so it’s not something that you should worry about excessively.
However, some Floridians do find that they want or need the flexibility provided by a living trust. It makes sense for wealthier individuals or individuals with a lot of valuable property to create a trust, because this will allow their beneficiaries to avoid probate and estate taxes after their death. You may also want to create a living trust if you own a small business and don’t want that business to go through probate.
If you’re still unsure whether a living trust is right for you, or if you just want to learn more about creating either a living trust or a will, set up an appointment to meet with a qualified Florida trust administration attorney at Wintter & Associates, P.A.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.