To start with we need to define or describe both a Last Will & Testament and a Trust and what they do.
A Last Will & Testament (LWT) is normally prepared on behalf of a client to ensure that their assets are distributed to the beneficiaries of their choosing. Simply stated it is a document that gives instructions on what is to be done with the persons property when they die. The LWT does not take effect until the person dies. In most instances the LWT must be “probated” which is the name of the legal processing of the LWT. In probate the deceased’s assets are gathered and inventoried, their debts are determined and paid and finally, once the time has expired for the filing of claims by the decedent’s creditors (3 months in Indiana), the estate can be distributed. The Personal Representative (a/k/a Testator or Testatrix) will be charged with performing these duties during probate.
The probate process in Indiana is expected to be completed within one year however it can take longer if there is a delay in liquidating assets or there is a contest of the will by a disgruntled person. If a will contest arises the court will interpret the LWT and direct final distribution of the estate. Because the probate process is in fact a court proceeding the filed documents (including the LWT) will be available for public viewing.
A trust is simply a contract between the Grantor (the person who establishes the trust) and the Trustee (the person in charge of carrying out the terms of the trust). Trusts can be created for varied reasons including tax savings, protection of assets for minor or incapacitated persons, or even to preserve assets so they will not be expended for nursing home care (Medicaid Planning). An inter vivos trust is usually funded and becomes effective during the Grantor’s lifetime. Depending upon the objectives of the trust it may be formulated to pay income or even principle to the Grantor during their lifetime. The Grantor will also determine what will happen to the trust property and income at their death. A Special needs Trust can be prepared for persons who are trying to protect assets while at the same time qualifying for public benefits such as Medicaid. A Third-Party Special Needs Trust can be used when someone other than the person receiving public benefits wants to set aside assets for the recipient’s care.
Trusts are favored by those families who prefer to remain discreet and keep their financial information out of the public domain. They also will often allow the family to avoid probate thus speeding up the distribution of the assets to the beneficiaries.
If you would like to further discuss planning with either a Last Will & Testament or a Trust do not hesitate to contact our office to set up an in-person or Zoom meeting.