Experiencing the loss of a loved one is one of the most difficult things a person must go through.
Sadly, delegating out a deceased loved one’s equity through the legalities of a will and a trust can lead to further disputes and heartbreak.
Don’t let the confusion over these legal documents add to the sorrow. This guide gives you the key facts about trusts and wills.
We share all the must-know information on the different types of wills and trusts, and how they might conflict.
We delve in to the legalities and possible outcomes of each. After reading this guide, you will have a better understanding which legal document has precedence, so you can be fully prepared.
What Is A Will?
A Last Testament of Will (will) is a legally binding document that clearly states how you wish your equity to be shared out after your death.
It also serves to stipulate intended guardians of any dependents, should you have any.
A will must be executed by someone over the age of 21, and who is mentally sound.
This person is ‘the testator.’ The testator then appoints an executor to handle distribution of said assets. Next, the testator must sign the legally binding contract in front of witnesses. Sometimes the will must be notarized, too.
What Are The 4 Main Types Of Wills?
There are 4 main types of wills. These are living, joint, single, and testimony trust wills. Handwritten or oral wills, called ‘Holographic Wills’ are legal in some U.S. states.
Your choice of will depends on your situation and needs.
You can have more than one will at once. Should someone have a terminal disease, they can make a living will in addition to a single will without coming across any legal issues.
What Is A Living Will?
A living will is slightly different from the other 3 types. Also known as an Advanced Directive, it is not concerned with financial distribution of any kind.
Instead, it serves as a legal document that states whether that person wants medical intervention, if and when they become too poorly to be heard.
It can also be termed ‘health care proxy’ or ‘power of attorney.’ This concerns appointing a person to oversee your end-of-life care and medical decisions.
When you appoint this person a health care proxy, they have the power to make your medical decisions for you.
What Is A Single Will?
Although a single will is usually made by a single person, it is often the choice for people in relationships too. It gives you control over precisely where you want your assets to go.
It also states who you wish to care for your children or defendants
What Is A Joint Will?
A joint or mirror will typically is made by married couples. These are mainly 2 separate wills provided by each spouse that reflect each other’s intentions.
Overall, it means each spouse inherits the other’s assets in the event of their demise.
What Is A Trust?
A trust is a legal contract where a person appoints someone (called a trustee), to look after financial assets or estate on behalf of that person, after their death.
They are trusted to distribute those assets to the named beneficiaries as and when the trust stipulates.
What Are The Types Of Trust?
Trusts can be divided into 4 main groups. These are living and testamentary trusts, and revocable or irrevocable trusts.
Living Trusts And Testamentary Trusts
A living trust (sometimes known as an Inter Vivos Trust) is made while the person is still alive. A trustee is appointed to look after the assets on behalf of beneficiaries until the trust conditions are satisfied.
An executor of the will puts the testamentary trust in place, following the grantor’s death. Some assets are put into a trust for named beneficiaries to receive after the grantor’s death.
Trusts are great for providing minors with future assets. The estate or equity frequently comes with conditions attached.
Revocable Vs. Irrevocable Trusts
A revokable trust can be changed or ended by the grantor at any stage. An irrevocable trust can not be stopped or amended once it is created. You basically need to be really sure.
Upon the death of the grantor, a revocable trust then becomes irrevocable.
Which Takes Legal Precedence: A Will Or Revocable Or Irrevocable Trust?
When a person dies, a legal proceeding termed ‘probate’ begins. This oversees the distribution of the assets, as set out in the will of the deceased.
The assets included in both revocable and irrevocable trusts are left out of the will, as they are no longer the property of the deceased.
They are legally owned by the named beneficiaries. Therefore, a revocable trust will always succeed over a will.
What Happens When A Revocable Or Irrevocable Trust And A Will Conflict?
In such cases, a trust will always supersede the will. Let’s say a revocable trust stated the grantor’s villa would go to his distant cousin following the grantor’s death.
Then suddenly, he meets the woman of his dreams and just before he dies, changes his will to leave all he has to her.
However, he runs out of time to alter the revocable trust, and ides with it still in place. Legally, this means the dream villa still goes to the very lucky distant cousin. Nothing can change that.
In conclusion, trusts are great options to ensure your loved ones receive the assets you wish for them. It gives you future power, which is helpful when minors are involved.
However, an irrevocable trust gives no leeway for a change of mind. Should the named beneficiary really let you down, you are still locked into the trust.
Both a will and a revocable trust can be altered. But, a will cannot override a trust. The only option is to revoke the trust before you die.
The best thing to do when putting your affairs in order is appoint an attorney to give you the right advice and support, go through the checklist.
That way, he can draw up legal documents that guarantee ownership goes where it is intended.