Many of my estate planning clients have done a little bit of homework before they scheduled an appointment with me. They are aware of the term “trust” and the term “will,” but are usually not aware of what, if any difference there is between the two. A “will” refers to a document which is created in accordance with the Illinois Probate Code (or other state law if outside of Illinois).
A will names a person to act as an executor, and gives instructions to the executor on what to do with the deceased person’s assets after that person is gone; usually to pay debts and taxes then distribute the rest of the assets to certain named persons or businesses (legatees).
Sometimes the administration, or probate, of a will can take a long time due to the type of assets which the deceased person owned. For example, it sometimes takes years for a house to sell. Other times a dispute makes the probate process last a long time. James Brown died in 2006 but his estate was not closed until 2015 due to a dispute between family members about who should get his stuff. However, the administration of an estate is generally finite. The will becomes effective only after the will creator (the Testator) dies. The executor then has specific named responsibilities, i.e. pay bills, sell real estate then distribute whatever is left over to legatees, and once those responsibilities are met the executor’s job is over.
A trust is similar to a will in many ways, but is markedly different in that it can last much longer than a will. A trust is governed by the Illinois Trusts and Trustees Act (or other state law if outside of Illinois).
A trust document names a Trustee and gives the Trustee instructions on how to care for and distribute the assets of the trust.
A trust can be created during one’s lifetime. It can have specific trigger events (like the death of the trust maker) which will change how the trust is administered. A trust can cover multiple generations of a family. There are generally specific provisions in the Trust about when and how it will terminate, and those instructions do not necessarily coincide with the death of someone.
To put the matter simply, a trust is a way for people set rules on how to control how their assets are handled before, during, and sometimes long after their death. A will describes how assets will pass at the time of someone’s death only, and will not control the assets long into the future unless there is some outside reason why the probate estate must stay open.
Wills and Trusts can take many different forms. Most people who decide that a trust is right for them will also create a will that directs the executor to give all or some of their assets to the trustee after their death. This is called a pour-over will. Some wills even have a trust within them called a testamentary trust. Trusts have a provision in them regarding how to split the assets after a certain trigger event happens that looks a lot like the distribution provisions of a will. This article is a very cursory exploration into what wills and trusts are, and is not intended as legal advice. If you would like to know more about wills or trusts, or are interested in setting up an appointment to determine which is right for you, please give our office a call at 217-639-7800 and set up an appointment for an estate planning consultation.