In our estate planning practice, we often are asked whether a Trust is the same thing as a Last Will and Testament (“Will”). If fact, many times we hear clients refer to them interchangeably. However, a Will and a Trust are not the same. Understanding their similarities and differences can help understand this answer to this often-asked question..
A Trust and a Will are similar in that they are both written documents which address administration of a person’s estate at the time of death. In this regard, both a Trust and a Will designate the person’s intended beneficiaries. In other words, the Trust and the Will each designate “who gets what.”
Each instrument also identifies “who will be in charge” of the decedent’s estate, i.e. the person overseeing the payment of obligations, filing of taxes, and the distribution of assets. In the case of a Will, a Personal Representative (“PR”) is appointed. For a Trust, a Trustee is named. Both a PR and a Trustee have certain powers which are given by the Will or Trust and by applicable statute. In Florida, Wills are governed by Chapter 732, Fla. Stat. Trusts are governed by Chapter 736, Fla. Stat.
Both a Trust and a Will also contain a number of important legal provisions. These cover matters such as how liabilities and taxes are dealt with, how distributions are to be made, compensation of the PR or Trustee, simultaneous death, etc.
Both the Trust and Will have similar requirements for proper execution (i.e. signing). Under Florida law, both a Trust and a Will must be signed in the presence of two witnesses who must also sign the instrument in the presence of the person making the Will or Trust and in the presence of each other.
Despite the similarities, the Trust and Will have some significant differences. Perhaps the biggest difference is in how the two instruments operate once the creator dies. In the case of a Will, in Florida a probate must be filed with the Circuit Court. Under Florida law, a Will is not self-implementing—a probate court is required to “admit” the Will and to give the Personal Representative authority to carry out the deceased person’s wishes. To do this, a probate court issues “Letters of Administration” to the PR. The Letters allow the PR may carry out the person’s wishes as expressed in their Will. However, having to go through probate means more time, expense, aggravation and because it is a court proceeding, it is public.
With a Trust, no probate is required. The person in charge under a Trust (the Trustee) is empowered by the Trust itself. The Trustee can act as authorized by the terms of the Trust and by the terms of Florida’s Trust Code. This is one of the reasons that establishing a Trust is a preferred method for passing along one’s assets at death. No probate is required and that can be a good thing! Administration of a Trust can be carried out without court involvement. This saves on time, expense, and allows the administration to be done privately without the world knowing the details.
Deciding whether to establish a Will or a Trust, or both, involves expertise in estate matters. Consulting an experienced estate planning attorney is important in order to get it right.