Why You Need Both a Will and a Trust

In Utah and many other states, both trusts and wills play essential roles, safeguarding assets at different stages. The person who signs a will is also known as a testator. The person who signs and creates a trust is called a grantor or settlor. A last will and testament or “will” becomes effective after the testator’s death, whereas a living trust is activated as soon as it is signed during the grantor’s life. Both can be updated up until the testator or grantor’s death, as long as they remain mentally competent. .

A will dictates the distribution of property solely owned by the deceased at the time of death, mostly just the tangible personal property items. However, it does not cover assets that automatically transfer to beneficiaries by contract or law, such as life insurance policies or joint tenancy with rights of survivorship. The will must go through the probate process in order to be accepted by life insurance companies and other financial institutions. The probate process can sometimes be lengthy and cumbersome for surviving heirs and is a point at which contestation is more likely since it is a public process. 

In contrast, a living trust can manage and distribute any assets placed into it, including life insurance policies and tenancy in common interests, provided the trust owns these assets prior to the grantor’s death. Property governed by a will requires probate for legal transfer to beneficiaries, making the will’s contents public. Conversely, a living trust’s terms remain private, and assets within the trust avoid probate, transferring directly to beneficiaries as outlined in the trust. Generally, a grantor designates successor trustees to manage the trust after their death and provide rules and guidelines to beneficiaries to avoid discord and confusion about how the inheritance should be spent.

Additionally, a trust can hold property for the benefit of certain beneficiaries, such as minor children or individuals who might otherwise squander their inheritance on fads and unwise expenses. The successor trustees oversee the trust, distributing assets according to its terms. 

Unlike a will, a living trust can include provisions for the grantor’s mental incapacity. If the grantor becomes incapacitated, the successor trustee takes over management of the trust, avoiding the need for court-appointed guardianship, which can be both costly and stressful.

In short, both documents are important. The will can outline that all the assets, should any be forgotten to be put into the name of the trust prior to the testator’s death, will pour over into the trust. The will also determines the guardians of any minor children. Schedule your appointment today to address any questions you have regarding the right estate plan for you.