Will vs Trust
Each adult must decide what is going to happen to their estate when they pass away. Clearly outlining your objectives for your financial affairs and property is one of the most considerate things you could do for your family. It helps eliminate uncertainty and speculation for those you care about the most.
Trusts and a last will and testament are estate planning papers you can utilize to detail your end-of-life wishes. However, what are the differences between a will and a trust, and which is most beneficial for you?
Will vs. Trust
A will, or last will and testament, is a legal document that details how your assets should be distributed after you pass away. This includes your tangible property — such as your house, vehicle, and pet(s) — also including financial assets, such as your financial institution and investment accounts. Using a will, you can also designate a legal guardian for your younger children.
A trust is a legal agreement in which you choose a trustee to oversee your assets for your beneficiaries. To do this, you place your assets into the trust, making the trust owner while the trustee manages them. A lot of people designate themselves as the trustee, which enables them to use and control their property throughout their lifetime. If you go this route, you should designate a successor trustee to oversee your trust following your passing or should you become debilitated.
What are the differences between a will and a trust?
Wills and Trusts carry out a comparable function. However, they have clear differences relating to configuration, intent, and effectiveness. Below are four key differences:
Timing: A will goes into effect following your passing, whereas a trust goes into effect once you create and fund it.
Probate: Assets held in a will are required to go through probate, the court-supervised legal procedure of distributing your estate following your passing. Assets in a trust bypass probate, entitling your heirs to receive them more quickly.
Privacy: A will becomes public record throughout the probate process. A trust stays private, in turn, can be enticing to those that want to safeguard the identity of their heirs and the specific of their property.
Maintenance: trusts require continual updates to add new assets. Any moment you acquire a new asset — such as a vehicle or banking account — you should transfer that asset to your trust sooner than later. When you have a will, estate attorneys suggest updating it every 3-5 years, or whenever you have a significant life event, such as getting married or adopting a child.
Who requires a trust rather than a will?
A trust may be right for you when you:
Want to bypass probate. If you have a large or complicated estate, a trust can speed up the transfer of assets by bypassing the probate process.
Own property in one or more states. Your property is required to go through probate in the state in which it’s located. Should you own property in more than one state, this means several probate processes, which could cause delays. A trust can simplify this process by bypassing probate completely.
Wish for privacy. If you wish to keep the specifics of your estate private, then a trust may be an appropriate fit for you. Your trust is not going to be part of the public record, different than a will, which becomes public throughout probate.
Are planning for debilitation. Should you be debilitated, a trust enables your successor trustee to step in and oversee your trust without having to wait for a court ruling.
Have minor children. Children cannot inherit assets until they become adults (usually at age 18). Through a trust, you can oversee and distribute assets for their benefit until they become adults.
Have special needs beneficiaries. A special needs trust guarantees that a beneficiary with special needs (for instance, someone with a sensory or learning disorder) receives assets without sacrificing government benefits.
Want management over asset distribution. A trust allows you have more management over when your beneficiaries get their inheritance, instead of getting it all at the same time as they would through a will.
Are part of a mixed family. A trust can help you support both your present partner and children from a prior relationship.
Do you require a will or trust?
So, is a trust superior to a will? Not all the time! It is subject to your specific needs and objectives. For a lot of Americans with straightforward wishes and simple estates, a last will and testament is an effective way for planning for the future.
Nevertheless, if you are part of a mixed family, own property in several states, or have special needs dependents, a trust could be more beneficial for you.
Source:
- Write your legal will online, Free & Simple. FreeWill. (n.d.). https://www.freewill.com/learn/trust-vs-will
Speak With Our Estate Planning Attorneys In Phoenix, Arizona Today
Estate planning is the right thing to do for the people you love. It’s another way to say “thank you” to those who love you. Some of the decisions are hard, but at Ogborne Law, we will help you navigate these difficult decisions.
Your Arizona estate planning attorney can help you select a will or trust or both. Your estate solution will work for you. You will have the peace of mind that comes with effective planning for the future. Call 602.343.1435 or contact Ogborne Law with questions.
