Wills and trusts are two types of legal arrangements that allow you to dictate what will happen to your estate—all of the “things” you own—after you die. Because there are many similarities between these two estate planning tools, it can often be confusing to determine which is best for you and your loved ones. However, the decision is an extremely important one…and one you should discuss with an estate planning attorney. Before you speak with an attorney, though, it is a good idea to have a basic understanding of the complex question of wills vs. trusts.
What is a Will?
A will is a legal document that dictates how your assets will be distributed after your death. It also often contains directions for estate administration, and other matters to ensure the instructions in your will can be carried out according to your wishes. You may include directions for your funeral and burial, assign an executor for your will, and name guardians for minor children.
What is a Trust?
A trust is a legal arrangement that allows an individual to transfer ownership of their assets into the trust, which is then managed by a chosen trustee. This transfer of assets may happen either before or after the owner’s death, depending on their goals, needs, and wishes. The trustee is then charged with managing these assets, and making sure that they ultimately reach their designated beneficiaries. When you set up a trust, you and your trust attorney will determine who to name as trustee. If you choose yourself, you will continue to control your estate until your death, after which a successor trustee will take over and manage your assets.
Wills vs. Trusts
Wills and trusts both have the same aim: the distribution of your assets after you die. Legally, though, they accomplish this through different means. Below are some key differences:
- Trusts are not subject to the probate process. For a will to be put into effect, it must first go through a probate court, a process that can be expensive and time-consuming. Trusts, if properly and fully-funded, bypass the probate process.
- Wills, unlike trusts, are public documents. Since probate proceedings are a matter of public record, anyone can access your will. This is not the case with trusts.
- Wills take effect only after death; trusts can become effective while the grantor is still living. Trusts take effect as soon as assets are transferred to them. A “living trust” can be created during the grantor’s lifetime, with the grantor serving as their own trustee.
- Trusts generally require more maintenance. You and your trust attorney should update your trust every time you acquire a significant new asset. Wills are usually updated only for major life events.
In addition to these differences, certain types of trusts can also reduce estate taxes, and can protect assets from being claimed by creditors or predators.
Which Should I Choose?
Both wills and trusts have their advantages and disadvantages, which can make choosing between the two difficult. Typically, the nature of your estate will dictate your decision: if you have a simple estate, a will may be sufficient, but if you have a larger estate, own a business, or want to maintain your privacy, a trust may be the better choice. Your estate planning attorney will help you determine which is the best choice for you to ensure that your hard-won assets end up safely in the hands of your chosen beneficiaries.
Contact Barry Law, LLC
The best way to determine whether you need a will or a trust (or both) is through consult with a qualified estate planning attorney. David J. Barry of Barry Law, LLC welcomes the opportunity to discuss your needs. Please contact us using the brief form below, or by contacting us at (913) 336-1600.