When you start to look into estate planning, one of the first questions to come up is what type of documents you need. That choice will include whether to use a trust or a will as the primary means for distributing your assets after you die.
Last Will and Testament
A will is a more traditional estate planning document, that relies on a court-administered process called probate. Essentially, probate confirms the legal transfer of assets from the person who passed away to the named heirs, with the help of ‘personal representative’, or executor.
The court will verify that the will is valid and was created without undue influence and the person who signed it had mental capacity. This is to protect the rightful heirs and ensure the wishes of the deceased are carried out. Because probate can take years and carries substantial costs, many estate planning professionals will recommend using a trust, either alone or in tandem with a will.
A trust is different from a will because a legal transfer of property occurs as soon as the trust is created, and assets are held in the trust under the supervision of a named trustee. Because it is revocable, the terms of the trust and beneficiaries can be changed as long as the ‘grantor’ is still alive.
These elements give a trust more flexibility than a will, and also allows assets to be managed and distributed much more quickly because there is no court process needed to make a legal transfer. There may be additional costs to creating a trust, but there are no substantial administrative probate costs or statutory attorney’s fees.
Will vs Trust
In some cases, using a will can be a simple step to make an estate plan, especially for those with few assets. There is a streamlined probate process for estates under a certain amount, so that lowers the cost and time factors.
However, for those with a home, a business, or minor children, a trust will be more useful and less expensive overall. Trust assets can even be managed by the trustee after death, to care for children or to simply preserve value. The trust terms will spell out how the trustee must act in the interest of the beneficiaries.
If you are wondering whether a trust or will is the best option for you, please contact us.