In this video Ted Gudorf of Gudorf Law Group, LLC will walk you through the difference between a will and trust.
A will is a document that directs what happens to your property after you die; it also names an executor who is responsible for carrying out the instructions in the will.
A trust, on the other hand, creates a relationship between three parties: the person making the trust (the 'trust maker'), those people or organizations that receive benefits from the trust ('trustees') and those people who manage assets held by the trust ('trust officers').
This video explains how wills and trusts work so you can decide which one best suits your needs. For more information about What We Do and How We Help our estate planning clients in Ohio watch our on demand workshop or contact us today.
Hi, this is Ted Gudorf from Gudorf Law Group. Today's topic is to discuss the difference between a will versus a trust. You know, numerous people have wills and do not realize it is useless as a legal document until you die. It does nothing for you while you are alive. And remember, it only transfers property that is in your name alone.
When you pass away, a will does not have any control over jointly owned property or property that passes through a beneficiary designation, such as life insurance or your retirement account. What is probate is a court proceeding where we publish a notice in the newspaper providing notice to all your creditors. Everything is public, including your will, and people can find an inventory of your entire estate in online documents.
Typical, probate in Montgomery or Greene County takes about two years. I have never seen one go longer than ten years. Also, the average cost of lawyer fees can be high and usually runs on a percentage basis and could be as much as 5% before it is over. Now, how does that compare with a trust? Well, a trust is a legal entity apart from the person or persons who created it that holds and controls the distribution of property outside of the probate process.
A trust has three primary roles. One, you have a trust maker who creates and funds the trust. Then, two, you have a trustee who holds and administers the property. And three, you have the beneficiary who receives the benefits. As I mentioned above, you can use a trust to avoid probate. I like to refer to it as a bucket.
So, I create this bucket, and I take what you own and put it in the bucket during your lifetime. So, I would put your checking, savings CDs, and your car in this bucket. And the law says that if you become incapacitated or die, it does not need to go through the probate process. In the trust document, you name somebody to be your successor trustee and have them carry out your instructions outside of the purview of the probate courts.
So how is a revocable trust different from a vocable trust? Remember, it is a private document and does not become a part of the public record. The owned assets by the revocable trust are free of all creditor claims. They distribute the assets of the trusts without any notice to any of your unsecured creditors. Therefore, trust administration is more efficient and costs substantially less.
And frankly, I think challenges to trust are less likely to occur than they are with a will. At our firm, we have a bias toward utilizing both revocable and irrevocable trusts. Now that does not mean you do not need a will; your will is a backup.
Have a good day, and I appreciate you tuning in and listening to this important message from Gudorf Law Group, LLC.