Wills and trusts are often talked about interchangeably; however, there are key differences between the two that it is helpful to understand.
Will vs. Trust
In Colorado, wills and trusts are both estate planning tools used to distribute assets after a person passes away.
A will is created during the individual’s lifetime and generally goes through probate when the person passes away. Probate is a legal process where the distribution of the estate is overseen by the court. The assets are distributed according to the instructions in the will. Probate documents are filed with the court and are usually public, meaning anyone can access them.
A trust is created during the individual’s lifetime and generally avoids probate. The assets in the trust are owned by the trust itself, not by the individual. The assets are distributed according to the trust’s terms.
A trust may offer more flexibility and faster distribution than a will. It can also be set up to provide for beneficiaries who are minors or who have special needs. A trust is not filed with the court and does not become part of public records.
Both wills and trusts can face legal challenges. Commonly, a will is contested for four reasons. One is lack of testamentary capacity, meaning that the person who created the will did not have the mental capacity to create it. Another is that the person who created the will was subject to undue influence. The others are fraud and forgery of a signature and that the will was not properly executed.
A trust may have similar legal challenges, but often also includes breach of fiduciary duty, which means that the person responsible for administering the trust did not act in the best interest of the beneficiaries.