Wills and trusts are two of the most common procedures for enacting people's desires for their legacies. Many people find it confusing to figure out which tool to use for a particular goal, though. If you're creating or modifying a will or trust, you should understand how the two legal instruments may interact.

Creating a Trust Through a Will

A will and trust attorney may recommend that you create a trust through a will. The trust doesn't exist at the time you write the will. However, the will contains terms that cause the trust to come into existence at the moment the grantor passes.

This approach usually works best when you can accomplish the desired goals of the trust while you're present. At the same time, an estate could create problems after you pass. For example, you might have a spouse who has medical care requirements. You can and do afford them right now, but you're worried your partner might not be able to handle them if you're not there. In that case, creating a trust upon your passing would avoid probate and empower a trustee to immediately deal with the financial ramifications of your spouse's medical care.

Establishing a Trust Beforehand

A trust can exist in advance. You might want to create a trust that only makes investments right now to support charities, for example. A will and trust attorney can then create documents that move additional assets into the trust if you pass.

The benefit of this approach is that the trust already exists. On the downside, you may incur maintenance costs associated with the trust.

Does Everything Have to Go into a Trust?

No, you can establish an estate without a trust. There may be practical, tax, and legal benefits to a trust, but sometimes other instruments will work better.

For example, most financial institutions allow payable-on-death benefits for accounts like checkings, savings, investments, and retirement. These operate outside the estate, and the most you may have to include in the will is the instructions for taking control of the accounts. However, you should never assume these sorts of solutions are ideal. Consult with a will and trust law attorney to learn what they think is appropriate.

Modifying a Will Attached to a Trust

You should also be aware of the challenges of modifying wills that are attached to trusts. Particularly, you'll want to have a will and trust attorney review any new or modified documents. Otherwise, the trust may not operate as planned.