What Does the Term “Trust” Mean?
Does a trust override a will?
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Wills, Trusts, and the value of Estate Planning.
What Happens When a Will and a Revocable Trust Conflict? A will and a trust are separate legal documents that typically share a common goal of facilitating a unified estate plan. Nonetheless, these two items ideally work in tandem. Since they are respective documents, they sometimes conflict with one another – either accidentally or intentionally.
What Does the Term “Trust” Mean?
Most people know how a will works, but you must also understand what Trust is to understand which one overrides the other in conflicting circumstances. When individuals use a trust in estate planning, they do so with either a living trust or a testamentary trust, described in the following way.
By definition, a revocable trust is a living trust established during the grantor’s life and may be changed at any time while the grantor is still living.1 Since revocable trusts become operative before the will takes effect at death, the Trust takes precedence over the will when there are discrepancies between the two.
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Wills, Trusts, and the value of Estate Planning
A will and a living trust are parts of a comprehensive estate plan that are sometimes inconsistent.
When there are conflicts, the Trust takes precedence.
A will has no power to decide who receives a living trust’s assets, such as cash, equities, bonds, real estate, and jewelry.
Living trust: A living trust is one that a person, known as a grantor, establishes during their lifetime. This type of Trust is when the grantor gives up ownership of the assets that they place in the Trust. They transfer ownership of such assets to the Living Trust. Once this arrangement is completed, the Trust holds the assets the individual has named, and the grantor no longer owns them.
Testamentary Trust: This type of Trust goes into effect after an individual’s death, created by specific provisions outlined in their will. Since the testamentary Trust isn’t completed until after the person dies, they own their assets until their death, and then the assets are then subject to the conditions set up in the will.
Trusts Are a Popular Option in Estate Planning
Some individuals opt to use a revocable living trust, allowing flexibility during the grantor’s lifetime. The use of a revocable living trust in estate planning gives the grantor the ability to change the terms of the Trust however and whenever they want throughout their life. By making these arrangements, the grantor also retains the right to terminate altogether or revoke the Trust if they choose to do so.
An Important Factor to Consider
In deciding whether a will should override a trust or not, there is a vital principle of trust law that cannot be ignored. Creating a trust means that the Trust itself becomes a separate legal entity in legal terms. The grantor no longer owns the assets transferred into a trust, regardless of whether it is revocable or irrevocable.
A Trust Is a Separate Entity
A trust is a separate entity from an individual from a legal standpoint. When the grantor of a revocable trust passes away, the assets in the Trust do not enter into the probate process along with a decedent’s assets.
Conversely, when a person dies, their will takes effect in a legal proceeding called probate, which aims to distribute the deceased individual’s property according to the terms dictated by the decedent’s will. But probate does not apply to property held in a living trust because the deceased person does not legally own those assets. In other words, the will has no authority over a trust’s assets, including cash, equities, bonds, real estate, automobiles, jewelry, artwork, and other tangible items.
This cannot be very clear to many individuals who write wills and expect the stipulations to occur without incident. Therefore, it’s vital to remember that a revocable trust is a separate entity and does not follow the provisions of an individual’s will upon their death. It’s prudent to seek the advice of a trust and estate planning attorney to make sure proceedings go as planned.
How to Avoid Issues Between Your Trust and Your Will
Consequently, It is important to remember that your heirs will be burdened with legal costs and a terrible inconvenience in a time of mourning if there are discrepancies between your Trust and your will. To best protect your loved ones from facing these issues, you must take measures to ensure that there are no conflicts.
Revoking a California Will or Trust.
Moreover, in California, a will can be revoked by a new will that revokes explicitly the old one or by destroying the will by physical act. Physical action can include burning, tearing, canceling, obliterating, or destroying the will. This must, however, be done by the person who created the will.
A revocable living trust revocation is different. The terms of the Trust govern it. For example, the Trust may allow for revocation through signed writing by the Trustor or Settlor delivered to the Trustee. A trustor could also take the assets out of a trust, and the Trust would cease to have control over the assets.
Revoking a will or revocable living trust is relatively straightforward, but it is essential to make sure it is done correctly. A Trust Attorney knowledgeable of wills and trusts can assist you if you consider revoking your will or Trust.
If you want to leave something to an individual in your will and aren’t sure whether your wishes will be affected by a trust you have set up, it is essential to check and see if your Trust owns that particular asset. If you realize that you have placed that asset in a trust, you may be able to change the terms of your Trust and retake ownership of the asset if your Trust is revocable. Whenever you have unresolved questions regarding assets held in your Trust, it is best to consult your estate planning lawyer for advice.
Trust the Professionals for Your Estate Planning Needs
As you already know, the purpose of your will is to ensure that the property you want to be given to certain heirs upon your death is handled according to your wishes. However, keep in mind that assets you place in your Trust may not be distributed according to your will since you are giving up ownership of them.