Planning for when we are no longer here, although unpleasant, is something that we all should do, no matter what age we are. Estate planning shows consideration to our loved ones, as it takes away many potential stressors and complications at what would be a highly emotional time.
While words like a will or a trust are well known, the ins and outs of what they are and how they operate in estate planning are often unclear for many, leading them to ask questions such as: What are the differences between a will vs trust? What would be the best choice for me?
Let us help you come to a clear understanding of the two over the course of this post.
What Is a Will?
A will is a legal document that enforces how you would like your assets, large or small, to be managed when you pass away. A will can also include your wishes in regard to your funeral and guardianship of any children.
It only comes into effect upon your passing.
Once it comes into effect, it will need to pass through a legal process called probate where a court will manage the administration and ensure adherence to the will. This process will mean making public the terms found in the will.
What Is a Trust?
A trust is an arrangement where the legal authority of property and other assets is given over to a “trustee“. A person can be a trustee, but you can also make it an organization such as a bank or legal firm. The beneficiaries are named in the trust document and the trustee will ensure that the outlined wishes are fulfilled.
One difference between a will vs trust is that a trust comes into effect once finalized and not upon your death.
A trust is also a private matter, as there is no need for those with trusts to go through probate court. This greatly speeds up matters leading to a smooth and efficient transition for the beneficiary.
Drafting a Will: Advantages and Disadvantages
While they have similar outcomes there are some clear matters to take into account when considering both a will and a trust.
A will gives peace of mind to all about what will happen to their belongings and those under their care. However, the process of finalizing matters once it comes into effect can be longer and more expensive than with a trust.
A court will examine the details of the will and if not stipulated beforehand select guardians over any minors and the executors involved. All of this can take over a year and leave your estate having to pay up around 2% to the Court, or even more of its total value.
However, there are clear advantages to having a will. Only a will can lay out your wishes regarding who you want to take care of your children. Therefore, if you are a parent, having a will drawn up is a must.
Additionally, a trust will only take into account the assets included in them. This means any personal items that are smaller and more sentimental in value that you wish to be distributed to individuals, in particular, are best served by a will.
Creating a Trust: Advantages and Disadvantages
The major advantage a trust will have for your beneficiaries is not having to go through the process of probate. But this comes at a cost.
Trusts are typically more expensive and in comparison to a will, that is drawn up and forgotten about, a trust requires far more maintenance.
You will need to ensure that the assets that you own are transferred from your name to the name of the trust. This can include title deeds to properties, bank accounts, and even vehicles. In fact, due to the labor involved in completing all this paperwork, it is not unheard of for people to not complete the process, meaning that they are not subject to the terms of the trust, potentially causing more issues down the line.
A trust does, however, allow more room for the unexpected twists and turns that one’s life can take. By including a successor trustee, you can arrange for someone you trust to take care of your affairs should you, due to an accident or illness, be unable to do so. This can provide peace of mind as it will avoid any court interventions over your assets.
Will vs Trust: Which One Is for Me?
As we can see, there are many factors to take into account when deciding whether to have a will or a trust. Therefore what matters most is your personal set of circumstances.
One thing to consider is whether your state permits informal probate.
This allows for the proceedings not to have to take place in court. This is an available opinion in the state of Wisconsin. Informal probate being available can greatly speed up the court process meaning that the common challenges associated with a will can be eased.
Some people wish not to be involved in the management of their estate plan on a day to day basis. If that is the case for you, having a trust could prove to be a more complicated affair.
It is however perfectly possible to have both. Wills and trusts serve slightly different purposes and can work hand in hand, to provide you with the security that you need.
Here for You No Matter What You Decide
We hope that we have provided you with some clarity in your choice of will vs trust. Other questions and considerations can be discussed with a competent estate planning attorney.
In your moments reflecting over what happens to what matters most to you, you should feel confident that your final decisions are adhered to. To ensure that is the case don’t hesitate to get in contact with us. With over 150 years of legal experience among our team, you can be confident that you will be able to receive the help that you need.