Wills and trusts are not the same. They are separate and distinct documents with specific purposes. While they may overlap under certain circumstances, each has unique functions not applicable to the other.
A Will does not become operative until death of the testator (the person making a will). During a person’s lifetime, it is a revocable plan for disposition of assets. Except if legally incompetent, a person can change their Will at any time, including even revoking their Will completely. A trust on the other hand, is a legal document that takes effect upon its execution. Furthermore, a trust may require certain actions be taken with respect to property at the time the trust is signed, such as deeding real property to the trustee and transferring other assets to the trust. Execution of a Will does not normally require any change in ownership of assets.
The question is rarely "which do I need, a will or a trust?" Generally it is best to think of the matter by asking "what kind of will do I need, and do I need a trust?"
You may have been told, or read in literature, that a trust eliminates the need for a Will. This is incorrect. A properly drawn trust which includes all of a person's property may dispose of asets similar to a Will, but the trust does not replace a Will nor does it eliminate probate. In order for a trust to have a useful testamentary function, all of a person’s property has to be conveyed to the trust, including real estate, bank accounts, investment accounts, household furniture and fixtures, etc. Even the most conscientious client may start off on the right track in this regard, but eventually they acquire interests in property which they forget to transfer to the trust, or inherit property while under a legal disability.
Sometimes people are led to believe that a trust eliminates the need for probate. This is not correct under Tennessee law! Probate is necessary in order to establish a time period of limitations for anyone who has, or thinks they have, a claim against the decedent. After this time period, no one can make any claims, legitimate or otherwise, against the decedent or the decedent's estate. Without probate, someone can come along years later and make a claim against any assets of the decedent. Defending such claims can be difficult and expensive.
Wills and trusts each have beneficial purposes, and each is appropriate under the proper circumstances. They are not interchangeable. Everyone should have a Will, but not everyone needs a trust. Know the differences, and ask questions so you are clear as to their uses.
Learn more (by clicking bold word) about a- Wills and b- Trusts
