Wills and trusts are separate legal documents that usually have a common goal of coordinating a comprehensive estate plan. The two documents ideally work in tandem, but because they’re separate and distinct documents, they sometimes can conflict with one another. This conflict can be accidental or on purpose. First you must understand when and where a will is used. The only place a will is ever used is in a probate court. Most plan to avoid probate so the result will be the will is never used to transfer assets.
For example, if my will says I give everything to Mickey Mouse, Mickey won’t get a dime unless I keep assets outside my trust or if my trust says Mickey gets something. A revocable trust is a living trust established during the life of the grantor. It can be changed at any time, while the grantor is still alive. Since revocable trusts become operative before the will takes effect at death, the trust takes precedence over the will, in the event that there are issues between the two. Wills and trusts are both used in all good complete estate plans.
An Investopedia article from 2019, “What Happens When a Will and a Revocable Trust Conflict?” reminds us that a will has no power to decide who receives a living trust’s assets, such as cash, equities, bonds, real estate and jewelry because a trust is a separate entity. It’s a separate entity from an individual. When the grantor dies, the assets in the trust don’t go into the probate process with a decedent’s personal assets. They remain trust property.
When a person dies, their will must be probated, and the deceased individual’s property is distributed according to the terms in the will. However, probate doesn’t apply to property held in a living trust, because those assets are not legally owned by the deceased. As such, the will has no authority over a trust’s assets, which may include cash, real estate, cars, jewelry, collectibles and other tangible items.
Let’s say that the family patriarch named Christopher Robin has two children named Pooh and Roo. Let’s also assume that Chris places his home into a living trust, which states that Pooh and Roo are to inherit the home. Several years later, Chris remarries and just before he dies, he executes a new will that purports to leave his house to his new wife, Kanga. In such an illustration, Chris would have needed to amend the trust to make the transfer to Kanga effective, because the house is trust property, and Chris no longer owns it to give away. That home becomes the property of the children, Pooh and Roo.
This can be a complex and confusing area, so work with an experienced estate planning attorney to be sure you don’t end up like Kanga with nowhere to live. Wills and trust often work together.
Remember a revocable trust is a separate entity and doesn’t follow the provisions of a person’s will upon his or her death. It is wise to seek the advice of a trust and estate planning attorney to make sure proceedings go as you intend.
While a revocable trust supersedes a will, the trust only controls those assets that have been placed into it. Therefore, if a revocable trust is formed, but assets aren’t moved into it, the trust provisions have no effect on those assets, at the time of the grantor’s death. If Christopher Robin created the trust but he failed to retitle the home as a trust asset, Kanga would have been able to take possession under the will. Oh bother!
Reference: Investopedia (August 5, 2019) “What Happens When a Will and a Revocable Trust Conflict?”
Suggested Key Terms: Estate Planning Lawyer, Wills, Intestacy, Probate Court, Inheritance, Asset Protection, Trustee, Revocable Living Trust