The difference between a living trust and a will may not always seem obvious. Both documents may be used to establish how a person’s assets may be handled after his death. They are not the same, however. Wills and living trusts differ in terms of when they take effect, how they are handled during probate, and cost.
A will is a document that is created to list how a person’s assets will be distributed after his death. Typically, a person creates a will to stipulate which of his heirs will receive his assets and specify how they will be divided. An executor typically has the responsibility of administering an individual’s will upon his death. With this type of document, the heirs do not receive, or benefit from, any of the assets until the will’s creator dies. Additionally, the assets included in a will have to go through probate, which is a court-supervised process that occurs after a person dies.
To understand the difference between a living trust and a will, it may help to consider the fact that the changes made in a living will can take effect while its creator, called the grantor, is still alive. Like a will, this planning tool is used to determine what will happen to a person’s assets, but in this case, the assets are placed into a trust and managed by a trustee. Often, though not always, the person who creates the trust becomes its trustee. In the event that he becomes unable to manage the trust, another trustee takes over. His job is to manage the assets according to the trust grantor’s wishes and on behalf of the beneficiaries of the trust.
Once a person who has created a living trust dies, the trustee may be expected to continue controlling the assets for the benefit of the beneficiaries, or the grantor may have set it up so that he distributes the assets. There is no executor involved with a living trust. Additionally, living trusts aren't usually subject to probate.
A will typically becomes public when the person who created it dies; this is another difference between a living trust and a will. Living trusts typically remain private. Additionally, cost may be another way in which a living trust and a will differ. Often, wills are less expensive to create than trusts. This is not always the case, however, and the complexity of these documents can play a role in determining costs.
