Trusts are legal arrangements designed to manage assets and protect them for the benefit of one or more beneficiaries. They can be created in a variety of ways, including under a will or a separate trust agreement. Two common types of trusts are trust under agreement and trust under will. While both types of trusts are similar in many ways, there are some important differences you need to understand.

In this article, we’ll explore the differences between trust under agreement and trust under will to help you choose the right type of trust for your needs.

Trust Under Agreement

A trust under agreement, also known as a living trust, is established during the lifetime of the grantor or the person who creates the trust. The grantor transfers assets to the living trust, which are then managed by a trustee for the benefit of the beneficiaries. The trustee can be the grantor or someone else appointed by the grantor.

In a trust under agreement, the grantor retains control over the assets in the trust while they are alive. They can change the terms of the trust, add or remove assets, or even revoke the trust altogether. Upon the grantor’s death, the trust becomes irrevocable, and the assets in the trust are distributed according to the terms of the trust agreement.

Trust Under Will

A trust under will, on the other hand, is established through a last will and testament. In this type of trust, the grantor directs that certain assets be placed into a trust upon their death. The trustee of the trust is then responsible for managing those assets for the benefit of the beneficiaries.

Unlike a trust under agreement, a trust under will only takes effect upon the grantor’s death, and it cannot be changed or revoked. Additionally, the assets placed in a trust under will are subject to probate, which can be a lengthy and expensive process.

Key Differences Between Trust Under Agreement and Trust Under Will

The main differences between trust under agreement and trust under will include the following:

– Control: In a trust under agreement, the grantor retains control over the assets in the trust while they are alive. In a trust under will, the grantor has no control over the assets in the trust once they have passed away.

– Probate: Assets in a trust under agreement are not subject to probate, while assets in a trust under will are subject to probate.

– Flexibility: A trust under agreement is more flexible than a trust under will since the grantor can change or revoke the trust during their lifetime.

– Cost: A trust under agreement can be less expensive than a trust under will since it avoids the costs of probate.

Conclusion

Choosing the right type of trust will depend on your needs and goals. If you want to maintain control over your assets during your lifetime and avoid probate, a trust under agreement may be the right choice. However, if you want to ensure that certain assets are transferred to your beneficiaries upon your death, a trust under will may be the better option. Consult with a lawyer experienced in estate planning and trusts to help you make an informed decision.