Wills vs. Trusts
Both wills and trusts distribute your assets upon your death. Trusts, however, also allow for the control your assets while you’re still alive. As the current trustee and beneficiary, there isn’t a large difference in how you access and manage your assets. With a trust, you can appoint a successor trustee to handle your affairs if you become incapacitated or need additional assistance as you get older. On the other hand, a will may be more appropriate and affordable for those without many assets to manage.
Benefits and Drawbacks of a Will
Benefits
When it comes to distributing assets, a will is often a good choice. They’re fairly easy to create and execute. Wills allow you to name beneficiaries for your estate and guardians for your children. They also offer you the chance to outline any final wishes you want to be carried out upon your death. Wills are also easy to update and change, should your priorities shift.
Drawbacks
Wills are not private, meaning your wishes, assets, and beneficiaries will be made public upon your death. They are also easier to contest. Even families not prone to fighting can find themselves arguing over the inheritance to which they feel entitled. The often lengthy and expensive court-supervised process of distributing your assets according to your will (i.e., the probate process) puts your wealth and family dynamics center stage – something most people would rather avoid.
It’s important to have a trust-based plan, but it’s also important to have a pour-over will that’s going to be a safety net in case something’s left out or forgotten from your trust.
Benefits and Drawbacks of a Trust
Benefits
Trusts allow assets to be distributed privately, without costly court involvement. Trusts also allow for asset protection for your beneficiaries. If you are worried about a beneficiary’s inheritance being swallowed by bankruptcy, collection agencies, lawsuit, or substance abuse issues, you’ll want to opt for a trust over a will. They also offer extra protection for those beneficiaries who are minors or receiving government benefits.
Drawbacks
The creation of a trust is more expensive upfront than a will.
“A trust-based plan instead of a will can avoid probate and all the headaches associated with it.”
Regardless of which option you choose, educating yourself on the differences between a will and a trust is a great place to begin. We can help answer specific questions you have about your options.
