Many people put off estate planning because they’re unsure whether to use a Will or a Trust. Understanding the basics of Wills and Trusts is essential when deciding how your assets will be managed and distributed. Both serve important roles, but they do so in different ways.
Knowing their differences can help you decide which option best suits your needs. Let’s discuss Wills and Trusts in detail to make an informed choice.
What Is a Will?
A Will is a legal document that sets forth how you want your assets to be distributed after you pass away. A will is relatively simple and can be updated anytime.
Key Features of a Will
- Simplicity: It’s straightforward and less expensive to set up than a trust.
- Probate: The potential downside of only having a Will is the estate assets must go through probate. Probate is a court process that validates the Will. Depending on circumstances, the probate process can take over nine months before the assets are distributed to your heirs. This time-consuming process also has costs and court filing fees.
- Privacy: A Will becomes part of the public record through probate, so anyone can see your wishes.
What Is a Trust?
A Trust is a legal arrangement where ownership of the assets you select are placed into the Trust. A Trust can be funded during your lifetime, or upon your passing. The Trustee manages the Trust assets and carries out your wishes for the trust assets both while you are alive, and when you have passed.
Key Features of a Trust
There are many types of Trusts, and the one you choose will depend on your needs and those of the people you want to share your money and property with. Here are some key features of trust:
- Avoiding Probate: Trusts bypass probate, which means your assets can be distributed more quickly and privately.
- Flexibility: Trusts offer more flexibility in managing and distributing assets. You can set specific instructions for how and when your assets are distributed.
- Protection: A trust can protect your assets if you become incapacitated, as a trustee can manage them on your behalf.
- Avoiding Creditors: Trusts own the assets, not you, thus if properly created your creditors cannot reach Trust assets.
Which One Is Right for You?
Choosing between a Will and a Trust depends on your needs and goals. Here are some factors to consider:
- Complexity of Your Estate: A Will may be sufficient for a simple estate with few assets. A trust may benefit more if your estate is more complex or includes significant assets.
- Privacy Concerns: If you prefer to keep your affairs private, a trust can offer more confidentiality since it doesn’t go through probate.
- Speed of Distribution: Trusts can expedite the distribution of your assets, avoiding the delays associated with probate.
- Incapacity Planning: A trust can provide a plan for managing your assets if you become incapacitated without court intervention.
- Cost Considerations: Wills are generally less expensive to create, but trusts can save money in the long run by avoiding probate costs.
Need help with creating a Will or choosing the right Trust? At Voelkl Law PC, we are here to explain in detail the process and guide you and your family every step of the way to ensure your wishes are carried out. Call us at 716-633-4030 to schedule your consultation today!
