Trusts vs. Wills

A will is a legal document that goes into effect after your death and conveys your wishes about how to distribute your assets. A will gives you the power to make decisions about how your estate will be divided. In the document, you can appoint a guardian for minor children. A will must go through probate court which is costly and time-consuming.

A trust is utilized while you’re still living. Assets can be transferred into a trust, which states who you want to manage and distribute your assets if you are incapable, and who receives them when you pass away. Trusts allow you to be more specific about how and when your beneficiary would receive your assets. A trust is more costly than a will but it avoids probate court which can save time, court fees, and transfers the assets directly to your beneficiaries.

Probably the number one reason that people create a trust is to avoid probate court, allowing your beneficiary to receive assets directly. It may also reduce estate taxes because these assets will not be considered part of your estate. A will must go through probate court which is a lengthy process. There are court fees associated with this. It is time-consuming and because it goes through court, it is a public record.

A trust allows you not only to designate where your assets will go, but it also allows you to manage how and when a person should receive them. For example, if you have a grandchild, you may wish to distribute those funds once he/she becomes an adult, or if someone has a disability, you may wish to have funds distributed over a period of time.

A power of attorney is someone that you appoint to make medical and/or financial decisions on your behalf if you become incapacitated due to an injury or illness. You can set up a power of attorney without having a trust through advanced medical directives, but you cannot name a power of attorney in your will since that does not come into effect until after death.

Assets are transferred directly from your trust to the trustee after you pass away. Unlike a will, a trust is kept private because it does not go through probate court, making it a public record. Ifyou don't want the public to know what's in your will, a trust is a good idea.

Tp summarize, the benefits of a trust include:

• Avoiding probate and reduce estate taxes
• It allows you to manage assets
• Offers the ability to name power of attorney
• It's kept private

A will can be easy to create and amend. There are many online resources, but consulting an attorney is still recommended before doing this yourself. Trusts are more costly and time-consuming to prepare but could help you save in the long run by avoiding probate.

If you have minor children, a will can be extremely beneficial. If you do not have a will, the court will decide who will care for your minor children. This may be a sibling or close relative, but it may not be the person you would have chosen.

A will allows you to designate the person to execute your will and who receives your assets. A will can also cover anything that was not transferred into a trust.

Since a will does not take effect until death, you control everything you own. A trust requires that you transfer ownership into a trust, which will be distributed after you’ve passed away. However, this can be a hassle, especially if it's an asset. You may need access to your checking account or home if it's part of a trust.

In short, the benefits of a will include:

• It's easier to create and less costly than a Trust
• You can name guardianship for minor children
• You have the ability to designate a person to execute your will
• You keep full control of your assets while you’re living

A will is a good idea if you have a straightforward estate and not many assets. A will is a good idea if you have minor children.

A trust is a good idea if you have a large estate or business. If you have a smaller estate, the costs of creating a trust may exceed the cost of avoiding probate.

Even though you may cover a lot of assets in your living trust, you should also create a “Pour-Over Will”, for any property that you left out of the trust.

The purpose of a will and trust are similar. They both allow you to choose where to distribute your assets when you pass away. Determining if you need one or the other, or both can be difficult. Consulting with a local estate attorney can guide you through the process and help determine which is right for your estate plan. For more help in understanding the differences in a trust vs will, please enter your information here and one of our highly trained staff will reach out to answer all your questions.