Deciding when is a will or trust better is an important decision. Both provide you and your family with distinct advantages. Wills are great for setting up distribution of assets. They are also less expensive initially. On the other hand, trusts can provide more protection and control. This article will help you decide which one is better for you.
What is a Will?
A will is a legally binding document that allows you to assign ownership of your assets to other individuals and organizations. Your last wishes are detailed in the will, which also may include specifying who will take guardianship or custody of minor children and/or pets. It may also state who should manage any business interests, as well as specify funeral arrangements.
What is a Trust?
A trust is created when someone (the trustee) takes legal title to property for the benefit of a third party (beneficiary). Trusts can be used as an estate planning tool as it can help avoid probate, save on taxes and provide a way for global asset protection. A trust bypasses the judicial system and allows the trustee to manage assets without going through court. It also offers more privacy than a will.
What Are Common Reasons People Need a Trust?
Identify How Difficult It May Be For Your Family to Recover After Your Death.
A trust can be helpful as it helps streamline the process of distributing your assets. Moreover, if you want absolute assurance that your beneficiaries receive their inheritance according to your wishes, a trust may be the best option. A will is more likely to be contested in court and take years before being finalized.
Is a Will or Trust Better For Protecting Unprepared Heirs?
When asking yourself is a will or trust better for your situation, consider if you want your heir to take control of assets immediately. A will allows an adult heir to take control of assets right away. But with a trust, you can decide when they gain access or can make decisions on their own. There is way more flexibility with a trust. Here are just some examples of how you can structure future trust distributions to your heirs:
- They can receive their inheritance in stages. For example, a third at age 25, another third at 30, and the remainder at 35.
- They can receive monthly allowances for their “support.” (I’m not a huge fan of this. Depending on how much money is involved, this is what can create a “trust fund baby.”)
- The trustee can give them money for their education or health needs.
- The trustee can give them discretionary payments based on guidelines you set forth in the trust document.
These are merely some examples. Talk to your estate plan attorney about the actual wording you want in your will or trust.
Conclusion – Is a Will or Trust Better?
It’s important to consult with a trust and estate attorney to determine if a trust is the right option for your specific needs and goals. Trusts can be complex. And different type of trusts have different features, benefits and drawbacks. So it’s important to understand the legal and financial implications of creating a trust before making a decision.
If you’re still wondering is a will or trust better for you, give us a call at 602-443-4888. We’re here to help.