What happens when someone dies with a valid Last Will and Testament that has conflicting language with an existing trust?
Both are legal documents and each have its own specific role in estate planning. A will designates how property will be distributed after a person’s death. A trust may be in existence during the person’s lifetime or it may be created at the time of death depending on the type of trust.
A testamentary trust is created by provisions in the will and goes into effect after death. The terms of a testamentary trust and conditions governing the trust are set out in the language of the will. A living trust, however, is established during the grantor’s lifetime. At the time of the trust’s creation, it is funded by assets which means those assets are transferred over to the trust and managed by the trustee on behalf of the designated beneficiaries. The grantor no longer owns those assets, the trust owns the assets.
The grantor’s rights over those assets will be impacted depending on whether it is a revocable or irrevocable trust. With a revocable trust, the grantor can modify the assets in the trust, the terms of the trust and/or revoke the trust completely. That is not the case with an irrevocable trust – leaving the grantor much more limited over making future changes.
Back to our question of whether a will supersedes a trust, we look at a basic legal principle governing trusts – trusts are separate entities in the eyes of the law. Regardless of whether the trust is revocable or irrevocable, any assets funding a trust are no longer property of the grantor. With that being said, when your will goes into probate court upon your death, the court only has authority to distribute your assets in the way that you directed by the terms of your will. The executor of your estate will distribute those assets but any assets that you no longer hold such as those used to fund a living trust will not be distributed according to the terms of the will but will remain under the governance of the trust.
If your will contains provisions that attempt to distribute assets already funding a trust, those provisions will not be valid. The terms of your trust will supersede the terms of your will because your will can only distribute assets that you owned at the time of your death. If your will directs the executor to set up a testamentary trust and fund it with specific assets, then as long you owned those assets at the time of your death, that trust can be created and funded with those assets.
Set up a consultation with an experienced estate planning attorney to review your will and any living trusts to ensure that there are no conflicts between the two. Doing a preventative review such as this can avoid a lot of time, stress and expense later for your loved ones. You can schedule an appointment with Stouffer Legal in the Greater Baltimore area by calling us at (443) 470-3599or emailing us at office@stoufflerlegal.com.
