Trusts vs Wills:  What is the Difference?

Wills & Trusts are both tools used to transfer assets to individuals or organizations upon the death of the owner of those assets.  That is where the similarities substantially end. 

 A Trust is an entity that is created by the requirements and rules stated in the Ohio Revised Code and specifically the Ohio Trust Code.  A Trust is in operation after its creation during the lifetime of the creator.  The Code does leave many variations to Trusts and how they are created.  There are many different types of Trusts.  Most people seeking Trusts know revocable or irrevocable.  That means that the Trust can either be revoked or ‘cancelled’ or it cannot.  A Trust can be revocable permanently or made irrevocable on the occurrence of certain criteria.  A Trust can be irrevocable from its inception.  Even an irrevocable Trust can be amended if the original provisions of the Trust allow for that.  Trusts can be created to handle life insurance policies, protect the creator from their creditors, control distributions over time.  The type of Trust depends on the needs of the creator. A Trust survives the death of the creator and continues to hold the assets of the deceased creator for the term of the Trust.  A properly funded Trust will avoid the use of the Probate Court to transfer assets to the designated beneficiaries as intended and, in the timeline, established by the creator.   

 A Will is a document created by the decedent when they are still living and competent to make the Will.  The Will only goes into effect upon the death of the creator.  The Will only governs the distribution of the assets of the deceased that do not have beneficiaries or payable on death beneficiaries.  If the deceased left assets that need to be transferred under the authority of the Probate Court, then the Will is submitted to the Court with an application for the administration of the estate.  Sometimes there is a reason for an asset to be distributed according to the Will vs a beneficiary designation. For example, a house that the decedent wants to go to all children equally but are not sure that transferring the house to each child as a partial owner may create a problem with the liquidation of the house and the distribution of the assets.  If the house is governed by the Will, then the Executor can sell the house and distribute the money to the beneficiaries without having to ensure that all beneficiaries are in agreement with issues like sale price.  The Court governs the estate to ensure that the Executor is being fair to the beneficiaries.