A will is a legal instrument that makes a disposition of property (distribution to specific people and entities). The individual creating the will is called a “testator.” The executor (a person appointed by the testator in the will) oversees the disposition.
A trust is created by an owner of property. In a trust, a trustee holds legal title to the property. This person is under a legal obligation to manage, invest, and safeguard the trust assets. Assets are distributed to designated individuals, called beneficiaries.
What is Required for a Valid Will?
The most common type of will is called a self-proving will. A self-proving will is one that has been witnessed and signed in accordance with state law formalities. These formalities differ by state. For example, in New York, the following formalities must be observed:
- Age: The testator must be 18 or older.
- Capacity: The testator must be of sound mind at the time they sign the will.
- Intent: The testator must have the present intent to make a will.
- Signature: The testator must sign and date the will. Another person may sign and date the will if the testator is in that person’s presence and directs them to do so.
- End of the Will: The signature must be at the end of the will.
- Witnesses: The testator must declare that the will is theirs and sign in the presence of two witnesses, or acknowledge their (the testator’s) signature to the witnesses. The declaration or acknowledgement can be done at the same time, or at separate times.
- In some states, the witnesses must sign the will while with the testator. In some states, the witnesses must sign the will, one right after the other.
- 30-day Period: The two witnesses must sign the will within 30 days. The 30-day “clock” begins when the first witness signs.
Another type of will is called a holographic will. A holographic will is written by the testator, but without the presence of any witnesses. Some states recognize a holographic will, signed and dated by the testator, as valid.
However, not every state does so it’s important to verify with your local laws before you rely on a holographic will. Most states recognizing such wills require that two or more people verify (testify in court) that the will is in the handwriting of the testator.
In an oral will, the testator orally communicates the terms of a will to someone. Most states do not recognize these wills as valid. Some exceptions apply. Some state courts will deem as valid, a will made by a member of the military while deployed.
What Must Be Included in a Will?
In order for a will to be properly executed, a will should have at least one provision directing:
- Appointment of a guardian for children who are minors.
- What person(s) are to receive what distributions.
- How any property not specifically distributed is to be disposed of.
- Appointment of an executor. The executor oversees the disposition of the estate (property and debts) of the deceased individual.
What is the Purpose of a Trust?
Trusts are created by “settlors.” Trusts are legal interests in property. The interest is held by a trustee, or trust manager. The trustee holds the interest for the benefit of trust recipients. The recipients, to whom trust assets are transferred by the trustee, are called beneficiaries.
What is Required to Create a Trust?
Creating a trust requires the following:
- A declaration, in writing. This declaration is by the settlor. The declaration states the settlor’s intent to create a trust.
- A “signing-over” from the settlor to the trustee of titles, deeds, and other proofs of ownership of the settlor’s property.
- Funding the trust with property.
- Naming one or more beneficiaries.
What are Some Examples of Different Types of Trusts?
Trust types include:
- Testamentary Trusts: These trusts are created by including a provision in the will, directing certain assets be disposed of in trust.
- Living Trusts: These trusts are created while the settlor is alive.
- Irrevocable Trusts: The terms of these trusts cannot be changed or revoked.
- Revocable Trusts: These trusts can be terminated by the settlor. The termination can occur for any reason. The settlor can terminate the trust until the settlor dies.
There are also trusts that are established for specific purposes. For example, if the settlor does not want beneficiaries to access the trust until they turn 18, the settlor can create a spendthrift trust. The trustee will enforce the “no access until 18” clause. When a beneficiary turns 18 years-old, then that person can be entitled to proceeds, under the trust terms.
Do I Need an Attorney If I Want to Create a Will or Trust?
If you need help with drafting a will or trust, you should contact an estate planning attorney. An experienced estate planning attorney near you can advise you as to the advantages and disadvantages of trusts and wills. The attorney can draft these documents on your behalf. The attorney can represent you in court over any will or trust dispute.