When it comes to planning your estate, two of the most commonly discussed options are wills and trusts. Both serve the purpose of distributing your assets after your death, but they do so in different ways, and each has its unique benefits. Deciding whether to choose a will or a trust depends on your specific circumstances and goals. Take a closer look at the differences between wills and trusts, and learn when one might be a better option for you.
What Is a Will?
A will is a legal document that outlines how you want your assets distributed after your death. It also allows you to name an executor who will carry out your wishes, and you can specify guardians for minor children. Wills are relatively straightforward to create and are the foundation of most estate plans.
In essence, wills are best for individuals with relatively simple estates who want a clear, legally recognized way to express their wishes for asset distribution, guardianship, and final arrangements.
What Is a Trust?
A trust is a legal arrangement where a trustee (who you appoint) holds and manages your assets on behalf of your beneficiaries. There are different types of trusts, but the most common for estate planning is a revocable living trust. With this type of trust, you can control and change the trust during your lifetime, and upon your death, the trust can seamlessly transfer your assets to your beneficiaries without going through probate.
Trusts are ideal for individuals with larger or more complex estates, people who own property in multiple states, or those looking to avoid the probate process.
When to Choose a Will
You should consider choosing a will if:
- You have a smaller estate and want a simple and straightforward way to express your wishes.
- You want to name guardians for minor children.
- You want to ensure that specific personal wishes, such as funeral arrangements, are legally documented.
A will allows you to clearly outline your desires, but it’s important to note that it only covers assets that are titled in your name and does not include joint ownership or beneficiaries on accounts such as life insurance or retirement funds.
When to Choose a Trust
A trust may be the better choice if:
- You want to avoid probate and ensure a faster distribution of assets.
- You prefer privacy and wish to keep your estate details out of public record.
- You own significant assets or properties in multiple states.
- You’re looking for ways to reduce estate taxes or protect assets from creditors.
Additionally, trusts allow you to set specific conditions for your beneficiaries. For example, you can specify that assets are distributed over time or when the beneficiary reaches a certain age. This level of control makes trusts a popular option for parents or individuals with complex financial situations.
Wills and Trusts Together
In some cases, it makes sense to have both a will and a trust. A pour-over will can act as a backup, ensuring that any assets not included in the trust are transferred to it after your death.
Need Help Deciding? Contact Billian Law
Choosing between a will and a trust can be complex, but you don’t have to make the decision alone. At Billian Law, we specialize in estate planning and can help you create a customized plan that protects your assets and reflects your wishes. Contact us today to schedule a consultation and ensure that your estate plan is tailored to your needs.
