Many people do not really enjoy thinking about their impending passing from this earth, which means that questions about wills, trusts, and estate distribution can be disconcerting. Still, it’s smart to consider what will happen to your estate and your sentimental belongings at your passing. Keep in mind that the more you prepare for that time of your life, the more you express your care for those you love; leaving them without making your wishes known can leave them bewildered, confused, and upset.
Take control now.
A will and or trust ensures that your belongings go to the people you choose. If you do not have a will in place, the court will appoint someone to distribute your assets—both the big ones (like your home) and the little ones (a sentimental pair of earrings or a watch, for example). Most of us would rather make those choices ourselves.
A Will or a Trust? Or Both?
Should you prepare a will, or a trust, or both? Perhaps defining each of them and comparing the two will help.
What is a Will?
A will is a written legal document that allows you to distribute your property as you wish upon your death. You can:
- Select beneficiaries of your property
- Choose someone to execute your wishes
- Receive court supervision to assure that your “executor” follows your guidelines.
Keep in mind that a will becomes public information once you pass. They are subject to probate proceedings should a probate become necessary (which can be very expensive)
If you have children, you will name a guardian for your children if you pass away. Interestingly, there is nothing automatic about this named guardian; the court still must affirm your nomination or reject it—although rejection of your selected guardian rarely occurs.
A will is almost always less expensive to prepare than a trust. A will is done when it is done—requiring no further action or involvement on your part. A trust, however, morphs as your life unfolds. The trust will be funded and developed while you are alive; so the ongoing work brings about ongoing expenses.
What is a Trust?
A Trust is just a different way to transfer your property upon your death. Some consider it an “alternative method” to a will. The trust differs from the will in that you manage your estate while you are living; a will manages your estate when you pass. With a trust, you have a trustee (yourself or someone you name if you are no longer willing or able) who manages your property according to your wishes. An attorney can help you weigh the pros and cons of both; and then, assist you in creating the legal document that you choose.
Why do people choose a Trust over a Will?
- Living trusts are not subject to probate proceedings.
- No court supervision is provided (or needed) should benefits be challenged or disputes arise. All defers to your successor trustee.
- Trusts are private matters—not open to the public.
- You continue to manage the assets in your trust as long as you are alive and of a sound mind.
- Should you lose the mental or physical ability to manage your trust, you name a “successor” to do so for you.
- There will be no probate costs if all of your assets are held within the Trust.
Keep in mind that trusts cost more than wills to prepare because they are ongoing and developing over your lifetime; you will be funding the trust and managing it along the way, rather than simply writing up a will and being done.
Since a trust is something that you establish during your living years, it can also bring you benefits while you are living. Over time, you will continue to transfer all of your estate into your trust. And, you can arrange that, upon your death, any assets not within the Trust at that time can be transferred. This will keep your property out of probate court.
Here’s the bottom line
You should choose at least one. If you die without a will or a trust, the state will gain control of your assets and will distribute them as it sees fit to a surviving spouse and/or your closest relatives. This removes you completely from the picture, and you may not like the results.
Many Choose Both.
Go ahead. Create a will. Include a trust within that will if you’d like. The goal here is to make sure that at the end of the day, all of your assets go to those you love rather than become the property of the state. If you have children, you can include a trust within the will that sets up instructions for how and when your minor children get what they need. If it costs a little more to do a trust or a will and a trust, so be it. Your family will be blessed by your attention to details during a time of grief.
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