Should I Have a Will or Trust?
Wills and trusts are the documents that direct the distribution of your assets upon your death. You may decide that you want to have a will prepared, or you may decide that you want to put all of your assets in trust. In both cases, you can name your choices for guardians of any minor children. The decision to have a will or a trust is a personal decision and will be dependent upon your personal circumstances.
If you have a will, the estate is processed as you wish, but through the probate court of the county in which you reside at the time of your death. In a will, your assets remain titled in your name. However, only assets that remain titled in your name at your death must be processed through the probate court. You have the ability to avoid probate of certain assets if they are titled to transfer on your death. These transfers are commonly known as a “Transfer on Death (“TOD”) or Beneficiary designation.
For example, a vehicle can be transferred outside of probate (without a trust) if the title lists a living beneficiary as the designated transfer on death designee. Similarly, real property can be transferred by a beneficiary deed if it is recorded prior to the owner’s death. Transfer on Death and Beneficiary designations only take effect at your death, and they can be revoked or changed at any point during your lifetime.
A trust document, called a revocable living trust, is a flexible document and amendments to it are generally easier to accomplish than amendments to a will. At death or incapacity, your appointed trustee handles all the distribution of your estate without court direction or interference. Under a trust, you must transfer all of your assets from your name to the name of the trust. It is important to understand that the transfer of property takes some effort on your part. You must title your assets into to the trust or it will remain, essentially, an empty shell.
In addition to a trust, a pourover will is usually prepared. A pourover will will capture any property that you have failed to title in the name of the trust at your death. While a pourover will seems like a perfect “failsafe,” it is important to remember that assets not titled to the trust which fall under the pourover will must be processed in the same manner as a “normal” will with the trust as the beneficiary. To rely on a pourover will would negate the benefit of having a trust in the first place.