Which is Better, a Will or a Trust?

What’s a Will? And Why a Trust?

A will is a legal declaration that governs the transfer of your property to your specified heirs and successors following your death. As a result, it will bear your directions regarding choices that an executor should make once you are gone. The will would allow the naming of an executor of the will and caregivers for young children or arrangements for your funerals. A will may direct executors to establish trust and designate trustees to retain valuables for the benefit of dependent children till they reach a certain age.

A will should therefore be drafted and attested in accordance with state laws. As a result, implementing it necessitates a legal procedure. It will have to be lodged with the local probate court and acted upon by your appointed executor. The paperwork involved in the will, upon your request, shall be delivered to you by the probate court. The probate also monitors its implementation and any contests.

1. Simple Will

The simple will allows you to choose who will get your property and a caregiver for minors. Drafting is also simple with the help of basic will templates. But it is best to opt for legal guidance.

2. Testamentary Trust Will

A testamentary transfers properties named in a will to your heirs but under the stewardship of a trustee to manage the property. A Testamentary Trust Will comes in handy when the beneficiaries are young.

3. Joint will

In a joint will, there may be one or two testators. The will is therefore signed by them separately. It works for spouses, where the will may be structured to allow them to inherit everything.

4. Living Will

Living wills are not about properties. Instead, it’s motivated by the foreshadowing of your incapacity. As such, it will allow the medical plans you desire to be in place. You will also have to appoint someone to make decisions on your behalf.

What’s a Trust?

Trusts are legal structures that allow assets to be transferred from the holder, the grantor, to trustees. They provide:

• The trustee’s property stewardship parameters.
• Disbursements to one or multiple chosen beneficiaries.
• Eventual disposal of the assets.

The trustee is just a fiduciary. As such, their work is mainly to manage the estate in line with the requirements of the trust agreement.

A will may only be functional when the grantor is dead. On the other hand, the trust takes effect upon the transference of assets. And in the case of a “living trust,” it may be established within the grantor’s lifetime. Still, there are “testamentary trusts. These are established after the grantors’ passing. But they will conform with the decedent’s will.

What Are the Types of Trusts?

There are various types of trusts, each serving different purposes in estate planning:

1. Revocable Trust: Allows the grantor to make changes, amendments, or terminate the trust during their lifetime. The assets within the trust are considered part of the taxable estate but pass to successors without probate.
2. Irrevocable Trust: The grantor transfers ownership of assets to the trust and cannot alter the initial instructions, managed by a trustee.
3. Charitable Trusts: Provide tax benefits when benefiting a charity and the grantor or beneficiaries. They can be either charitable lead trusts or charitable remainder trusts, each with specific tax implications.
4. Special Needs Trusts: Designed to support disabled loved ones financially while maintaining their eligibility for federal aid.

What’s the Difference Between a Trust and a Will?

The key differences between trusts and wills include:

1. Trust assets do not require probate, whereas wills do.
2. Will processes are public, while trust procedures are private.
3. Trusts generally require more updates than wills.

Setting up a will can be a straightforward and less expensive option for simple estates, but trusts offer benefits like privacy and faster asset distribution.

Trust vs. Will: What Should You Choose?

There is no one-size-fits-all answer in estate planning. The choice between a will and a trust depends on individual circumstances. Wills are often simpler and less costly but go through probate, while trusts can avoid probate and offer privacy but are more expensive to establish and maintain. Trusts and wills can also complement each other, allowing for a comprehensive estate plan that addresses all aspects of asset distribution.

Final Thoughts: Estate planning is crucial for ensuring your assets are distributed according to your wishes. Whether you choose a will, a trust, or a combination of both, legal counsel is essential for navigating the legal complexities. For expert guidance, contact Hess-Verdon at 949-706-7300.