Wills and trusts both have some positives and some negatives, and they have much in common. Choose one depending on what you want to accomplish and what you're prepared to do to get it done. Since this depends on your personal circumstances, it's a good idea to talk to an experienced estate-planning attorney before making up your mind.
A living trust allows you to maintain control over your assets while you are still alive or pass the responsibility to a trustee of your choosing. Once you die, the trust specifies what to do with all of the entrusted assets. A will is a document that only takes effect after you die and doesn’t grant anybody any control over your assets until then.
Both wills and living trusts can be changed any time you want, but you’ll probably find it easier to revoke your old will than to revoke a trust. A will usually costs less to change, too.
Benefits to Heirs
Aside from the initial setup cost, leaving a will can end up costing your heirs much more in time and money as they deal with probate, estate taxes and other expenses and hassles. All assets in a living trust avoid probate but they must belong to the trust at the time you die for this to work. It’s a good idea to have a so-called pour-over will, which transfers anything left out of the trust into it when you die.
Sometimes family members who feel slighted may contest a will, which typically results in a long, drawn-out and costly court battle. While a living trust may be challenged, it’s much more difficult to do and less common.
Wills don’t do much for you while you’re alive: wills are geared toward making things as easy as possible for your heirs after you’re gone. A living trust does the same thing, but it can also be set up so that your assets will be managed for your benefit and pay for your care if you are incapacitated. If you never need it while you’re alive, your assets will pass to your heirs as directed by your trust once you die.
A trust is the best choice if you want your business to remain private because you never have to make public the disposition of a trust. Since a will must go through probate and the courts, the contents of the will become public record and the information becomes available to anyone who cares to look it up.
- Jupiterimages/liquidlibrary/Getty Images
- What Is the Difference Between a Land Trust Vs. a Family Trust?
- Irrevocable Vs. Revocable Trust
- What Is the Difference Between Putting a House in Joint Tenancy and a Trust?
- How to Find Family Trust Records
- Primary & Secondary Beneficiaries on a Trust
- What Is the Difference Between a Living Trust and an Estate Account?
- How to Transfer a Roth IRA to a Living Trust
- Paperwork for a Will