A last will and testament is a legal document that outlines an individual’s final wishes regarding the disposition of any assets not provided for elsewhere, as well as preferences for the care of minor dependents. It can be a stand-alone document or used together with a revocable or irrevocable trust. How it functions in an estate plan depends on whether the plan is entirely will-based (where the will covers the distribution of assets at death) or trust-based (when assets are held in a trust for later disposition). There are key differences in how assets are transferred, whether by a will or a trust, or even by beneficiary designation. Beneficiary designations on retirement accounts, bank accounts (sometimes called “transfer on death” or “pay on death” designations) and insurance policies, are a means of avoiding a probate process for specific assets, and only take effect upon death of the account owner. While a trust is operational and working during an individual’s lifetime (“inter vivos”), a last will only takes effect upon the maker’s death and is overseen by each state’s probate court under the administration of an executor. The probate court process is a public one and can be both lengthy and expensive, depending upon the circumstances.
