When planning for the future and making a Florida estate plan, it is essential to understand the differences between trusts and wills. Both serve as important tools for estate planning, but they have distinct purposes and advantages.
Here are some of the powers a trust offers that a will typically does not.
Control over asset distributions
A significant difference between a trust and a will is the level of control they offer over the distribution of assets. A will only takes effect after someone dies and is subject to probate, which is a court-supervised procedure for validating the will and distributing assets. This means a will becomes a public record, and the court oversees the distribution according to its terms.
In contrast, a trust can take shape during one’s lifetime and allows for the immediate transfer of assets to the trust. The grantor, or the person who creates the trust, can specify how and when the trustee distributes assets to beneficiaries, providing more control and privacy over the process. Trusts can also bypass the probate process entirely, which can be time-consuming and costly.
Continuity of asset management
Another advantage of trusts is their ability to provide continuity in managing assets, even if the grantor suffers incapacitation. In a revocable living trust, for instance, the grantor can designate a successor trustee to step in and manage the trust assets if the grantor is no longer able to do so.
Improved asset protection
Trusts also offer a level of asset protection that wills cannot provide. For example, certain irrevocable trusts can shield assets from creditors and lawsuits, helping preserve wealth for beneficiaries. In contrast, assets distributed through a will become the property of the beneficiaries immediately and are vulnerable to legal claims.
Research shows that only about 33% of Americans create estate plans, and even fewer include trusts in them. Those who neglect to do so miss out on the many notable benefits trusts provide.