Some documents on our website require Adobe Acrobat to view. You can I am often asked “What is the difference between a Will and a Trust?” They are similar in a couple of ways: each will describe how you would like your assets to be distributed at your death and each will name someone to manage your assets after you are gone.
When someone dies having only a Will, it will need to be submitted to the Probate Court (some jurisdictions call this a “Surrogate” Court or a “Family” Court). The court’s job is to prove the validity of the Will and appoint the executor or personal representative. No one will be able to manage the assets under the Will unless they have first been appointed by the Probate Court. Depending upon the type of process that the court requires, the named executor may have to file a bond prior to being appointed. The bond acts as a pledge on the part of the executor to perform all of his duties for the benefit of the estate. If the executor does not perform these duties for the benefit of the estate, he can be held personally liable. The executor may also have to file an inventory of the estate assets; lastly, the executor may have to file an accounting which indicates to all interested parties how and to whom the assets in the estate were expended or distributed. In Massachusetts, like many states, this can take months to complete.
A revocable trust, on the other hand, avoids the process described above. The key to avoiding this process is that the trust must be “funded” prior to the individual’s death. This means that his bank, brokerage or other accounts are titled in the name of the trust or that the trust is the beneficiary of an asset such as life insurance or an IRA.
The person who manages the trust is called the Trustee. He has the same obligations to perform his duties for the benefit of the beneficiaries of the trust as the executor of the Will does, but he does not have to file a bond or submit an inventory to the Probate Court. As a matter of good practice, a Trustee will file an accounting with the beneficiaries and have them ratify the distributions he has made.
Every estate plan should be individually tailored to the needs of the individual. No two plans are ever alike just as no two people are ever alike.