In Perspectives

In the estate planning and administration worlds there are a lot of moving parts and it can be overwhelming to understand them if you don’t work in those areas every day. If you’ve been told that you need to get your estate plan done, or that you need a will, or if you’re wondering whether you do, this blog will help! We will break down what a basic estate plan consists of, explain the difference between a Will and a Trust, and shed some light on that nasty word – “Probate!”

What is an Estate Plan?

An estate plan is a set of documents that appoint people to take care of you and your assets during your lifetime and after death. There are two parts to an estate plan: (1) the documents that are effective during your lifetime, and (2) those that are effective upon your death.
The documents effective during your lifetime are:

  • Power of Attorney for finances,
  • Patient Advocate designation for health care decisions;
  • HIPAA authorization; and
  • A Trust in the event of your incapacity.

Upon your passing, the following documents are used:

  • Will; and
  • Trust.

The focus of this blog is primarily upon those effective upon your passing.

What is the difference between a Will and a Trust?

Both of these documents can serve the purpose of getting your possessions to the people or organizations that you want them to go to upon your death. However, they are not equal in how that is achieved.

Your Will names a person to be in charge of distributing your assets upon your death (a Personal Representative); however, that person must go through the Probate Court to do so. For that reason, your Will gets filed with the Probate Court, which means it becomes a public document and anyone can request a copy of it. Don’t believe it? Check out a copy of Michael Jackson’s Will here. After he passed, someone obtained a copy and posted it to the internet. Many people see the need to go through the court and the lack of anonymity, as two major downsides to having only a Will.

Your Trust also names a person to be in charge of distributing your possessions upon your death (the Trustee), but in addition, that person can act for you upon your incapacity. This means that if you had dementia that reached a stage where you needed someone to manage your affairs for you, your Trustee could step in and do so. Additionally, that person does not have to go through the Probate Court to distribute possessions, and the Trust is not filed with the Probate Court so it remains a private document. Your Trust will own most of your possessions, so upon your death or in-capacity, the Trustee can act immediately to manage and distribute those possessions.

You will always have a Will, just in case one of your possessions does not get titled in the name of your Trust, or you didn’t name the Trust as a beneficiary where required (i.e., life insurance, bank accounts). The Will acts in conjunction with your Trust as a “catch all.” The Will, when combined with a Trust, is called a “pour-over” Will; imagine it is a bucket that is there to catch all your possessions that are not first caught by your Trust bucket. Then, anything caught by the Will bucket is “poured-over” into the Trust bucket, and distributed according to its terms. If everything was done as planned and titled in the name of the Trust, the Will in this instance would not be used and the Probate Court is never involved; however, if needed, it is there.

What is Probate and why do you want to avoid it?

You may have heard that you want to avoid Probate, but do you know why or what that means? The Probate Court is the court that handles all matters regarding the distribution of your possessions after your death, and the management of your possessions upon your incapacity (as well as appointing a guardian for you if you are incapacitated). As stated above, if you only have a Will and/or you have possessions titled outside of your Trust and you pass away, the distribution of your possessions will have to go through Probate Court. This means that final approval of the disposition must be obtained from the court through the proper filings, there will need to be a final accounting, and your Personal Representative will need to be sure that all of your legally enforceable debts and bills have been paid.

Often times this requires the Personal Representative to incur the cost of hiring an attorney, as this is not necessarily an easy process to navigate. Additionally, if you were to become incapacitated (i.e. from an accident resulting in a coma, or aggressive dementia or Alzheimer’s) and hadn’t done any estate planning, or only had a Will, the Probate Court would need to get involved to appoint someone to act for you to manage your finances. If you have a Trust in place, your Trustee would work with your Power of Attorney in that regard.

What does this all mean?

A Will is a good start, but for more robust and thorough coverage, you need a full estate plan. In most cases, this is going to include a Will and Trust combination. If you have more questions, a Legacy Trust team member would be happy to discuss your needs and refer you to an estate planning attorney in the area to help you get to where you need to be.

How Legacy Trust can help.

As a trust-only bank, Legacy Trust is distinctively experienced in all areas of trust and estate administration. Acting as sole trustee, co-trustee, agent for trustee or successor trustee, we build meaningful relationships with your beneficiaries, and provide competent and objective management of financial assets.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.


Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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