Before we pass away, most of us want to ensure some level of security for the friends and family that we’ll be leaving behind.

Whether that means ensuring that financial matters are handled, protecting their peace of mind, or leaving them as smooth a transition as possible, it’s only natural to want to provide for your loved ones.

But that leaves another question – what’s the best way to protect your family when you’re no longer around?

For the sake of your own peace of mind – not to mention for the benefit of your loved ones – it’s important to leave a clear plan in place for what will happen with your assets, including financial accounts, real estate, and other property. We call this process estate planning, and it's an essential step on the way to a shorter, more efficient probate process.

Of course, many different documents and procedures go into the estate planning process, which will be slightly different for each and every individual.

One common question that arises regards the best way to distribute your assets and property after death. Most commonly, two estate planning devices come up: wills and trusts. Many have heard these two terms batted around, with no idea what they really mean.

Some people will say that a will is the end-all, be-all. Others say it’s establishing a trust (or trusts). Or, perhaps, the best strategy for you and yours will involve both.

Whatever the case, it’s important that you have a basic grasp on wills and trusts – and the difference between the two – as you prepare for the estate planning process (or, if you’re an executor or trustee, as you prepare to begin the probate and/or estate administration process).

Here are a few things to consider:

Wills

Put most simply, a will is a document that names who will receive your property in the event of your death, while also appointing a legal representative (usually called an executor) to carry out your wishes.

A will only goes into effect after you have died, and will only cover certain types of property. Namely, a will governs the disposition of property owned solely in the decedent’s name, including interests in property held by tenancy in common. It does not apply to any assets that pass directly to beneficiaries by contract, such as certain insurance policies, or any assets owned in joint tenancy with rights of survivorship.

It’s also important to recognize that wills must be registered with the courts and, subsequently, pass through probate. During this process, a court will ensure that the will is valid, settle any disputes, and oversee the administration of the estate and the distribution of the property.

Finally, wills can be used to set your affairs in order, so to speak. You may use a will to instruct your executor on how to pay your taxes and debts, name a guardian for your surviving children, and dictate your funeral or burial arrangements.

Trusts

First, it’s important to note that trusts come in various shapes and sizes. For the most part, when talking about trusts with regard to estate planning, we are referring to revocable living trusts.

A trust is a legal arrangement by which one individual holds legal title to a property on behalf of another person. A living trust goes into effect as soon as it’s signed, though you can certainly change or revise it up until the time of your death.

Because it takes effect before you pass, a trust can be used to begin the distribution of your property before, during, or after the event of your death (and may include provisions for disability, as well). A trust only covers property that has specifically been included by the grantor (i.e., the person who created the trust).

Unlike wills, trusts do not pass through the probate process, which could end up saving time and money down the line. A trust might also afford a certain measure of privacy, whereas wills must become a matter of public record when they’re submitted for probate.

There are also various provisions and mechanisms that can be built into trusts for the sake of your beneficiaries, including provisions that hold property for minors (who may not be able to legally assume ownership) or which create conditions for spendthrifts (those who may need guidance in successfully budgeting and saving their inheritance).

If you have any questions about these or any other estate planning or probate matters, don’t hesitate to drop us a line! At Chicago Probate Law, our mission is to guide you through every step of the probate process with compassion and clarity.

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