This is one of the most common (and important) questions Maui residents encounter in planning their estate. Although a Will and a Trust are both used to pass property, there is a world of difference between the two.
In its simplest form, a Will is a set of written instructions directing the distribution of one’s property and assets, and appointing one or more persons (known as the “personal representative” or “executor”) to oversee the probate process. While a Will is almost always better than nothing, it does not avoid probate. The cost to administer a Will can therefore sometimes be as expensive as a probate proceeding for someone who died with no planning at all.
And while a Will usually becomes valid once properly signed, and can be amended, it takes effect only at death. It is not a document which provides for financial management during periods of disability or incapacity.
Once delivered to the Court for probate, a Will becomes a public record. Usually this means that information about beneficiaries and what they will each receive is also available to the public. This aspect often leads Maui residents who prefer privacy to look for other ways to pass property.
The administration of a Will is rules-driven, and normally requires several steps. It is for this reason that it usually takes longer (and costs more) to administer a Will than a Trust.
Despite these concerns, it is important to recognize that a Will controls aspects which are not addressed by other estate planning documents. Therefore, for example, although a Will is best known as a document to pass property, it is also used by parents with young children to appoint one or more guardians to oversee the upbringing and care of their keiki if either or both parents die unexpectedly. For these Maui families, a carefully drafted Will which addresses this concern is an essential part of their estate plan.
A Trust, on the other hand, is an entity established once a trust agreement is signed. The trust agreement directs the distribution of property and assets, and appoints one or more persons (known as “trustees”) to oversee the administrative process. However, when established and funded properly, the assets passing upon death through a Trust avoid probate. And where the trust agreement names one or more successor trustees, it is also an excellent way to provide for the management of finances during periods of mental incompetency or incapacity.
A Trust does not become a public record upon death, except in unusual situations such as a dispute between the trustee and beneficiaries. As such, the trustee, beneficiaries and their respective advisors are usually the only ones who receive information about the trust and its assets.
The use of a Trust does not automatically mean that probate will never be a problem. Quite to the contrary, probate will still be a concern for assets which should have been but were not transferred into the Trust properly, before death. It is for this reason that a Will focused primarily on directing distribution of any remaining assets which were overlooked or forgotten (often known as a “pour over” Will), is normally signed with the trust agreement. (The same Will can also be used to appoint one or more guardians to raise underaged children.) The fees to prepare a Trust and related documents are therefore usually greater than that incurred for a Will alone.
One of the most important points to remember is that even the best drafted will and or trust does not and cannot resolve all of the concerns which need to be addressed in the estate planning process. It is for this reason that other documents such as medical directives, powers of attorney, and burial instructions, are also typically signed at the same time.
Ultimately, the decision on how best to proceed will depend upon one own’s circumstances and preferences. As with any other legal matter, it is always best to seek the input and assistance of your estate planning attorney to address these and other questions.
Note: The information in this article and throughout this website is not intended, and should not under any circumstances be interpreted, as legal advice. This article is intended only as a general discussion, and should not be read or viewed as a comprehensive analysis of all relevant aspects, of each topic discussed. The reader is encouraged to consult with legal counsel for assistance with any aspect of the estate planning process, and any other matter of a legal nature