What Are the Differences Between Wills and Trusts?
Wills and trusts serve similar but distinct legal purposes in Arizona. Both communicate what the person making the legal instrument—known as the principal—wants to be done with their property, finances, and personal obligations after they pass away.
Through a will, a principal can leave instructions for how their tax and debt obligations should be resolved, who should receive guardianship of their children, what should be done with business and personal assets, and who should inherit certain property and assets. Wills are public documents managed by the court system, meaning that a probate court will still be involved in the execution of a will however now with a Will the Court has a roadmap or a set of instructions on where that person wanted everything to go. This can streamline the Probate Process and add piece of mind.
There are a wide variety of provisions that an attorney could help someone include in their will. Primarily, a will outlines how the testator’s property and assets will be distributed when they die and names the heirs or beneficiaries who will receive these assets. However, there are other important terms that can be outlined in a person’s will.
A will should designate an executor to handle the distribution of the testator’s estate and the payment of their debts upon their death. The will should explicitly state the extent of the authority granted to the executor and potentially name a backup executor to succeed the original choice in the event they predecease the testator
To get around this, a person in Arizona can create a Revocable Trust and once established, can place some or all of their assets into that private Trust. Revocable trusts can be modified or terminated at any time by the principal prior to their death, while irrevocable trusts offer greater protection from tax liability but cannot be changed at all once they are put in place.
There are numerous trust benefits that may cause someone to enlist the help of a local attorney. One of the most significant benefits of placing assets in a trust rather than a will is that a trust does not go through the probate process. As such, the creation of a trust can relieve the grantor’s family of the additional stress and lengthy court process frequently associated with probate proceedings.
In addition to avoiding probate, a trust can also be a valuable legal structure to protect the grantor’s assets from certain types of creditor claims. The creation of a trust allows someone to clearly outline how they want their assets to be distributed upon their death, as well as the method of distributing these assets. A trust can also relieve the decedent’s heirs of the obligation to pay specific kinds of taxes and serve as a more productive method of structuring the grantor’s tax liabilities.
WILL VS. REVOCABLE TRUST
|Avoidance of probate||x|| |
|Cut-off of creditors/claims in probate process|| ||x|
|Avoidance/reduction of estate taxes||x||x|
|Orderly administration of property prior to death||x|| |
|Protection of minors and spendthrifts||x||x *|
|Expense prior to death||x|| |
|Expenses after death|| ||x|
|Immediate and continuous access to cash flow||x|| |
|Provide for method of management of client’s assets prior to death but after mental deterioration (Avoid guardianship)||x|| |
|Avoidance of Will Contest||x|| |
*If property is given in trust