When beginning your estate planning, one of the major questions that you must ask yourself is whether you need a will or a trust, or maybe even both. While these two documents do have their similarities, they are also very different. So should you create a trust or a will? The answer is different for every person depending upon their circumstances. In order to decide for yourself, you must compare them yourself.
Benefits of a Will
Simply put, a will allows you to state your final wishes and distribute your property among your heirs. Here is a list of some of the benefits that come only by having a will:
- Simple and easy to change. Wills are the more basic of the two options. They are inexpensive and easy to change. A trust is more complicated and can be difficult to change. Creating a trust often requires the assistance of an attorney.
- Name guardians for minor children. A will is the only document that allows you to name guardians for children under 18. Parents will minor children should highly consider creating a will. If you and your spouse were to die without a will, the court would then be in charge of appointing a guardian for any minor children you may have.
- Name property manager for children’s property. In a will, you are able to name a property manager or custodian for any property left to your children. The property manager would then take care of the property until your heir came to a certain age.
- Name an executor. An executor is the person who is in charge of wrapping up your estate after your death. Their job is to communicate with the court, pay your bills, and distribute any property that goes through probate. You cannot name an executor in a living trust.
- Leave instructions for taxes and debts. In a will, you are able to leave instructions to your executor detailing how you would like him or her to pay your taxes or pay back your debts. This is not something you do in a living trust.
At the very least, every person should create a will. This can easily be done by yourself and with the help of online websites and other resources. It is a basic document that fits the needs of most people.
Benefits of a Trust
A living trust is similar to a will. You can use it to leave property and alter the terms of the trust when circumstances change. On the other hand, trusts have obvious advantages that wills do not have. These advantages lead many to start seeking a lawyer who will help them set up their own living trust.
- Avoid probate. Probate is the court system designed to wrap up a person’s affairs upon their death. This process can be time-consuming and expensive. Some people wait up to a year to finally see the probate process come to an end. With a trust, you are able to avoid probate and have your property immediately distributed by your trustee.
- Maintain privacy. When a will goes through probate, the document becomes public. A living trust stays private because it does not have to go through the probate process.
- Protection from court challenges. Wills and trusts are rarely challenged, but a trust is much more difficult to successfully attack.
- Prepare for incapacitation. In a living trust, you are able to prepare you estate in the event that you become disabled due to unforeseen health problems. Your successor trustee steps in during these times to manage your estate and financial affairs. A will cannot do this.
While a living trust might sound all grand at first, there are significant disadvantages. Trusts are usually much more expensive to set up than a will and can cost upwards of $1000. The advantages of avoiding probate are more worth it for those in possession of a wealthy estate.
As was previously stated, the decision to create a will or a trust depends heavily of your life situation. A will is often the simpler solution, but there are certain circumstances in which a living trust might be necessary. If any of the following statements applies to you, consider creating a living trust:
- A blended family with children from a previous marriage
- A way to provide long-term care for my disabled family member
- A business owner
Individuals in these circumstances should further look into obtaining their own living trust. A trust has far more capabilities than a will and can be used to provide for your loved ones in tricky situations.
Call our Estate team at (480)467-4325 to discuss your case today.