People in Florida who are creating an estate plan might wonder about the difference between a will and a trust. One of the biggest differences is that a will is not private and generally must go through the probate process. A trust is private, and when a person dies, the property in it goes directly to beneficiaries without having to pass through probate.
A trust may be revocable or irrevocable. With a revocable trust, the creator can change or cancel the trust. An irrevocable trust cannot be changed. A revocable trust offers fewer protections than an irrevocable one. For example, for Medicaid purposes, property in a revocable trust is considered to still belong to the trust creator, also known as the grantor. This would not be the case with an irrevocable trust. However, a person could be both grantor and beneficiary of an irrevocable trust and might be paid a regular income from it.
Neither a will nor a trust offers complete protection against conflict between relatives or the possibility that fiduciaries might mishandle assets, and there are other alternatives for passing assets for people who want to avoid probate. Retirement accounts and life insurance policies pass through beneficiary designations. Some property can be titled as joint tenancies with rights of survivorship.
Many estate plans are a mix of these types of vehicles. Even if an estate is primarily passed using a trust, the person may use what is called a “pour-over will,” which places any assets not already covered under the trust in the trust on the person’s death. People who are unsure whether they need a wills or trusts as the primary part of their estate plan might want to talk to an attorney. Trusts are not just for wealthy families and can be useful in a variety of situations.