A will and a trust are necessary tools in Chicago estate planning. They allow you to protect your assets for the benefit of your loved ones. There are significant differences between a will and a trust. Creating the most beneficial framework to protect your assets requires examining the difference between the two estate planning options and your goals in asset preservation and distribution.

We have specific information about wills here.

We have specific information about trusts and trust administration here.

A Will and a Trust Differ in When They Take Effect

The time at which a will and a trust take effect is a primary differentiator between the legal documents. A will declares your final wishes upon death. A will only becomes effective at the time of the testator’s death. 

A testator, the person who creates the will, may express their wishes for distributing their assets after death. They may also establish guardianship or conservatorship for minor children in the event of their death in a will. However, a will only becomes effective upon death.

In contrast, a trust becomes effective upon its creation and funding. Once a trustor creates a trust, a trustee manages the assets the trustor places in it. A trustee is responsible for complying with the trustor’s wishes during the trustor’s lifetime and upon the trustor’s death. You do need an estate plan that offers asset protection. Consider when you want the estate plan to take effect.

A Will and a Trust Differ in Their Legal Process

The use of a will to declare your wishes at death requires that it go through the probate process before the distribution of assets. In Chicago, the Cook County Probate Division will validate your will. The probate process in Chicago generally takes 12 to 18 months to complete. Complex estates and wills may take longer to settle.

There is a mandatory 6-month creditor notice period during probate. The time allows for any potential creditors to file a formal claim against the estate for any debt you may owe. Your assets transfer to your loved ones only after probate is complete. Key delays may exist that can impact the Illinois probate timeline. 

Some trusts place your assets into a separate legal entity upon its creation and funding. Your assets in that trust transfer immediately to your beneficiaries at the time of your death. The trust bypasses probate and the mandatory notice periods. A trust is one of several valuable legal tools to help avoid probate in Illinois. Assets not placed in a trust or choosing a testamentary trust still require probate. 

Privacy Differs Between a Will and a Trust

A will becomes public record after your death. Anyone can access information about your will once the probate process begins. Court records are generally public information. 

Creating a trust may help you maintain the privacy of your assets. The terms of a trust also remain private and are not made public. Setting up a trust in Illinois will enable you to protect sensitive personal and business financial information.

Differences in Tax and Debt Benefits Can Exist Between a Will and a Trust

A will generally does not offer tax benefits for an estate. The value of the estate affects the estate tax that may be owed. A will also does not offer protection from creditors for any debt you may owe at the time of death.

The type of trust you choose to create will determine if tax benefits and creditor protections are available. To create a trust, it is necessary to know the key differences between a revocable trust and an irrevocable trust.

An irrevocable trust protects assets from creditors because it removes them from your estate and places them in a separate entity. Putting your assets in an irrevocable trust may provide tax relief by reducing the value of the estate, allowing you to better manage taxes on the transfer of wealth.  

Because you retain control of your assets until death in a revocable trust, the same tax and debt benefits do not apply. Help is available for filing estate taxes in Illinois if you are the beneficiary of a will or a trust. At Plan Forward Legal, we offer peace of mind and the legal guidance to make the tax laws work for you. 

Distribution of Assets May Differ in a Will and a Trust

A will provides instructions on the distribution of assets after your death once the probate process is complete. A trust can allow more control and flexibility over how and when the distribution of assets occurs. You may choose to set up a trust that allows asset distribution to begin during your life to support a beneficiary’s specific needs, such as education. 

A testamentary trust is part of a will and becomes effective after death. Probate becomes part of the process. The distribution of assets occurs once probate is complete. Review the complexity of your estate and your goals in creating a will or a trust before choosing what is best for you.

A testamentary trust may be more beneficial to your loved ones, allowing for asset distribution to begin at the time of your death. Staggering distribution of assets and other options may help you maximize a trust’s potential benefits. 

A Will and A Trust Offer Different Financial Protections for a Disabled Loved One

You may have a spouse or a child who experiences a qualifying impairment that impacts or will impact the ability to engage in gainful employment. A medical diagnosis of a disability may qualify them for various government benefits programs. Creating a trust may allow your loved one to benefit from you financially without endangering their right to receive necessary government benefits.

A disabled loved one who is named the beneficiary in a will may experience an increase in resources or income upon your death. Possessing more assets can jeopardize their ability to qualify and receive some benefits, like supplemental security income (SSI) or Medicaid.

Creating a trust may allow a disabled family member to benefit from your estate, paying for expenses that government benefits do not cover, while limiting the impact to their financial status. Choosing the right way to distribute assets can provide immediate and future financial protection for someone you love.

Is a Will or Trust Right for Me?

The differences between a will and a trust, and your goals in creating these legal documents, require a thorough review of your assets and how their distribution will impact you and your loved ones.  Consider these questions when creating a will, trust, or both:

• How complex is my estate, and what are the significant assets I hope to manage and protect?
• Is privacy surrounding my personal estate or business a priority when establishing an estate plan?
• Are there special needs or disabilities I should consider before naming a beneficiary in a will or trust?
• Will potential changes in the law impact whether I choose a will or a trust?
• Do my resources better support the creation and management of a will or a trust?

As an estate planning attorney in Chicago, I work with clients to provide the legal tools to determine whether creating a will, a trust, or a combination of both is right for their family. Working with Plan Forward Legal is a quality investment in your family’s future and your peace of mind.