An example of how wills and trusts can work together
For those individuals who want to take a proactive approach to estate planning but are reluctant to relinquish control of assets in an irrevocable trust, there are additional options.
A revocable trust is perhaps the legal instrument offering the most flexibility. Assets can be moved or withdrawn at the grantor’s will. However, retaining that control will likely not offer any tax benefits. In addition, trust property generally must be specifically identified, and a grantor who expects his or her assets to change may not want to continually revise the trust.
Another option may be a testamentary trust. Unlike other trusts, this type of estate planning tool is not formed until the grantor’s death. A will can specify the type of property that will be gifted into a testamentary trust. The scope of a testamentary trust can also be far reaching, providing for a surviving spouse during their lifetime, and later for the grantor's heirs or named beneficiaries.
As this discussions suggests, a comprehensive estate plan may involve both wills and trusts. Wills can even be used to create trusts and provide for the disposition of subsequently acquired or undesignated property. Trusts, in turn, can provide support to loved ones within prescribed limitations, such as a testamentary trust. With the help of an attorney, an individual can utilize all available legal, financial and insurance instruments to maximize tax savings and provide for the future security of loved ones. An attorney can also explain the duties of a trustee, and help individuals create instruments that will hopefully survive court scrutiny or attacks upon their legitimacy.
Source: The Wall Street Journal, “Creating an Estate Plan Around a Prenup,” Alex Coppola, July 17, 2014