23 Jun Do I need a trust and will: does a trust override a will?
Many people ask us here at Phelps LaClair about the difference between wills and trusts. To most, the revocable living trust looks a lot like a will. They wonder if a trust can replace a will, and whether they need to create a will if they have already established a trust.
What is a will?
A will is a document that spells out your wishes for asset distribution to your beneficiaries after your death. It can include physical assets such as personal property and real estate, as well as digital assets that you have created and stored in binary form. A will names an executor who is charged with the responsibility to see that the terms of the will are carried out. A will only comes into effect after your death.
What is a trust?
A trust is similar to a will in that it also declares your desires for asset distribution, and it also appoints a successor who will manage and close out the estate when you die. However, it is significantly different and more comprehensive than a will.
A trust can provide many things that a will cannot. It offers privacy, flexibility, protection of your assets, ability to avoid probate, plans for incapacity, and continuation of asset management.
If I have a trust, can it replace my will?
This question is difficult to nail down with a simple “yes” or “no” answer. Some clients ask us if a will can override an irrevocable trust, and that’s a simple NO. A trust can replace a will in some circumstances, meaning it can serve the same purposes of a will after death. A trust provides even more benefits for your estate than a will, and this leads some to wonder if they should dissolve their will.
Using both a will and a trust can be beneficial to some estates. Depending on your wishes, you may want to utilize both of these tools, along with others, to best take care of your estate. The experts at Phelps LaClair can help you build a concrete estate plan.
Let’s go through an example of an estate that used both a trust and a will:
Our estate holder, George, has assets of $500,000 he wants to bequeath to his grandchildren, residential properties he wants to leave to his sons, and interests through a family business (LLC) that he wants divided equally between each beneficiary.
George decides to create a trust for the liquid assets, in order to avoid probate court after his passing. He transfers discounted shares of his business interests to his children through the LLC and retains control of the business while living. Then, in his will, George states, “Any real property I own at the time of death is to be sold and the proceeds split equally among my two [named] sons.”
Because of the benefits of the trust, the $500,000 avoids probate court after George’s death. The details in the will do not have an effect on these assets, because the will does not override the trust. The family business is taken care of through the conditions in the LLC, and avoids probate court as well.
However, because of the residential assets covered in the will, the executor will have to sell the real estate properties that George owns, with probate court involvement, and split the assets between George’s two sons.
Where Can I Find Help Creating an Estate Plan in Arizona?
You will find that we’re a relationship firm at Phelps LaClair. It’s our goal to be the very best team of estate planning professionals through a personal approach, a lifetime commitment to you, and a plan that actually serves you.
We want the planning we do now to make all the difference for your loved ones when it’s time. A solid, well-prepared estate plan can ensure that the legacy you leave is a blessing and not a curse. We serve the Chandler, Mesa, Phoenix, Scottsdale, and Glendale areas of Arizona. Call us to get your estate plan started today!
photo, “side view of senior man sitting at table with laptop and looking at camera at home” by Igor Vetushko from Deposit Photos on 6/23/2021 | used under the creative commons license | no changes made