Wills and trusts are both important documents for doing your Massachusetts estate plan. They serve different purposes but they can work together to create a comprehensive estate plan. These are the main differences between a living trust and a last will and testament:
- Whether probate is involved
- What assets and legal affairs are affected
- When the instrument takes effect
Last Will and Testament
A will is a legal document that directs who will receive your property when you pass away, and it appoints a legal representative (“executor”) to carry out your wishes. A will covers any property that’s in your name at the time you die that’s not held in a trust or is an asset that passes automatically to designated beneficiaries (e.g., inheriting under insurance, joint tenancy, or retirement plans), and it only takes effect after you die.
A will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the creator wanted. Probate in Massachusetts costs the estate money and usually takes many months.
A living trust is a legal arrangement through which a trustee (a person or an institution like a bank or law firm) holds legal title to property for the benefit of another person (a beneficiary). A trust can be used to distribute property before death, at death, or afterwards. In order for property to be included in a trust, it must be put in the name of the trust.
Living trusts can be revocable (meaning you can change or end it at any time) or irrevocable, depending on your needs and goals. A revocable trust often has two types of beneficiaries—one that receives income and assets from the trust during their lives, and another that receives whatever is left over after the first set of beneficiaries dies. With an irrevocable trust, often the grantor (the person setting up the trust) will retain the right to income from the trust for the rest of their lives, while saving the trust principal for their family or other beneficiaries.
Creating a living trust for your beneficiaries can be especially helpful if a beneficiary is a minor, has special needs or receives public assistance, can be easily influenced by others, or is incapable of managing money. In these cases, their inheritance could be held in trust for their lifetime and managed by a trustee of your choosing to meet the beneficiary’s needs and circumstances.
A trust passes outside of probate, so a court doesn’t need to oversee the process. People often create a living trust so they can avoid probate, which saves them both time and money. Also, unlike a last will and testament, which becomes part of the public record, a trust can remain private.
Wills and trusts each have their advantages and can help you achieve different estate planning goals. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust can be used to plan for disability or to provide savings on taxes. Irrevocable rusts can be especially helpful in planning for MassHealth (Medicaid) eligibility.
As a Massachusetts will and trust attorney, I can help you decide how to use a will and a trust in your estate plan. We can also provide you with probate help. Call us today at (617) 299-6976 or send an email to firstname.lastname@example.org to schedule a free consultation today.