What is the Difference Between a Last Will and Testament and a Revocable Living Trust?
There are similarities between a Last Will and Testament and a Revocable Living Trust:
1. both pass along specific assets,
2. both name guardians,
3. both are written,signed and witnessed;
4. both can be amended and revoked.
The differences between both are what sets them apart:
A Last Will and Testament, appoints an Executor who then takes the original Last Will and Testament to the Probate Court after the person dies. The assets are then collected and distributed according to the directions in the Last Will and Testament. There are North Carolina Probate Court rules and regulations that need to be followed by the Executor once he or she has been appointed. During the lifetime of the person who created the Last Will and Testament, the title of assets are not changed. However, the names of beneficiaries may need to be changed to keep everything consistent with the Last Will and Testament.
A Revocable Living Trust appoints a Trustee and a Successor Trustee. This person manages the assets in the trust after death. If done properly, a Revocable Living Trust will avoid probate. How? Because the title of assets (not all) will be changed to the name of the Trust. This is called Funding the Trust. If the asset is not in the name of the person who died, then there is nothing to probate. Ultimately, avoiding Probate.
I must caution you that there are certain assets that should not be titled into the name of the trust and there are beneficiary designations that must be changed in order for the Revocable Living Trust plan to work. You should consult with an attorney, a financial planner and a CPA prior to making any changes – if you don’t you will run the risk of unwanted tax liabilities.
“What is the Difference Between a Last Will and Testament
and a Revocable Living Trust?”