There are several similarities between wills and living trusts, but there are also many differences. A lot of these differences arise from the fundamental differences that exist between wills and living trusts. These differences can, depending on your situation, create certain advantages of avoiding probate as opposed to using the probate administration process to distribute your assets. A knowledgeable estate planning attorney can help you decide which method makes the most sense for you.
Many newspapers, especially smaller ones, may host a regular question-and-answer column with a local professional. In the online version of one Midwestern newspaper, the professional hosting the Q&A was a local estate planning attorney. Recently, he posted an answer to a questioner who wanted to know why a will must be recorded or filed with the court, but a living trust does not.
The attorney diligently walked his audience through the differences between wills and living trusts. In short, what it comes down to is that, fundamentally, wills are creations of the judicial process and living trusts are not. A will has exactly zero legal power to accomplish anything until it is submitted to a probate court and a probate judge declares it to be valid, because the declaration of its validity is a byproduct of the probate administration process. A living trust is, in the eyes of the law, a contract between the trust's grantor and the trust's trustee and, just like most contracts, becomes effective the moment it is signed and notarized.
Of course, the requirement that a will be filed or recorded with the court is not the only procedural difference between wills and living trusts. As noted above, a will only has the power to control anything after it has successfully gone the legal process of probate administration. There are “side effects,” so to speak, of the probate process. While laws have been reformed and the probate administration process has been made simpler in many states, estates that do not qualify for administration through a “small estate” or “summary administration” process still have to jump through a series of procedural hoops. There is still accounting to be done, paperwork that must be submitted to the court and hearings that must be attended. Even with the changes that have come to pass in the law in the last several years and decades, probate still has the potential to be expensive, stressful and time-consuming for the loved ones you leave behind, especially whomever you've asked to be the administrator of your estate.
Again, because they are creatures of contract law and not of a judicial process, living trusts often do not require similar hurdles and similar expenditures of money, time and stress. The events and actions that will take place upon the event of your death are triggered, not by a judicial ruling and order, but by a provision that was already established within your living trust document when you signed it.
Additionally, regardless of the changes that may been constructed in your state's probate administration laws, one thing that is unchanged is that, in the clear majority of places, a probate case is, like most court case files, a public record. This means that, in most cases, almost anybody can go to the court clerk's office, request your file and review every non-sealed document in it. In many probate case files, this would include inventory documents, accounting documents and lists of heirs. Because trusts generally do not have to go this judicial process upon the death of the grantor, there generally is no court file at all and no public record for people to access.
This is, of course, a very broad (and non-comprehensive) overview of wills and living trusts and the distinctions between them. Not everyone will benefit for the potential advantages that living trusts offer. Not everyone will feel the impact of the potential drawbacks of probate administration. But many will. Which group you fit into is something that only you, working together with a licensed attorney can decide. An experienced estate planning lawyer can help you choose the planning path that makes the most sense for you.