Should You Have Both a Living Trust and a Will?

Two of the most common estate planning devices are the last will and testament and the living trust. Both documents are meant to ensure that the decedent’s wealth is distributed in accordance with his or her wishes. However, there are differences between the two, and they can in fact work together.

The most notable characteristics of a will are the following:

• Simplicity — Creating a will is fairly straightforward and not very expensive. Changing a will may be done by a codicil (a written amendment) or by executing an entirely new will, either to add or remove beneficiaries or to change the distribution of assets.
• Property retention — The person making a will retains all rights, title and ownership of all property listed in the will until his or her death. Any property may be sold, given away or encumbered with debt during the person’s lifetime.
• Guardianships — The person executing a will can nominate a choice of guardian for any minor children, though a court of law has the ultimate authority to appoint.
• Probate — Any property conveyed by the will must go through probate, a court-supervised settling of the estate by the person appointed as executor. There are court fees and other associated costs.

A living trust is a private arrangement whereby a person transfers assets to the trust and manages them as trustee during his or her lifetime, with instructions for distributing them to named beneficiaries upon his or her death. The trust document names a successor trustee to manage the distribution. Characteristics of living trusts are these:

• Flexibility — The terms of the trust can be modified up until the creator’s death. As living trusts are revocable, beneficiaries can be added or removed and distributions among beneficiaries may be changed.
• Property control — Title to the assets are transferred to the living trust. However, the creator, as trustee, retains full use and control of the assets and may add or remove assets.
• No probate — The assets in a living trust avoid probate entirely, allowing them to be transferred directly to beneficiaries without a court proceeding.

Why would you need both a living trust and a will? A living trust can only distribute the assets it owns, which means that property not included in the trust has no specified beneficiary. By contrast, a will can cover all property owned by the decedent at time of death, except for property transferred by other means. Therefore, a will can direct that any property not otherwise accounted for can be transferred to the trust, so that it goes to the trust beneficiaries. This is known as a “pour over” clause.

Jeffrey P. Hall, PLLC is a full service estate planning and probate law firm serving the greater Phoenix, Arizona metropolitan area, with offices in Chandler, Phoenix and Peoria. Contact us online or call 480-409-5174 for a free initial consultation.