Planning for the future is a responsible step everyone should take, and part of that planning involves deciding how you’d like your assets distributed after you’re gone. Two of the most common tools for this purpose are wills and trusts. While both serve similar purposes, they have distinct differences. In this blog post, we’ll break down the basics, explaining how they’re different, and helping you make smart choices about where your money and belongings go after you’re gone.
The Basics of a Will
A last will and testament, commonly known as a will, is a legal document that outlines how a person’s assets and property should be distributed upon their death. Wills are straightforward and accessible, making them a popular choice for many individuals. In a will, you can specify who gets your stuff (the beneficiaries), designate an executor (or administrator) to make sure your stuff is given out the way you wanted it to be done, and appoint guardians for minor children.
One of the defining features of a will is that it only becomes effective after the individual’s death. Until then, the person retains full control and can modify or revoke the will at any time, provided they are of sound mind. Upon a person’s death, in most states, a will must be filed with the court and go through a process called probate, where the court validates the will to ensure it complies with state laws and then monitors how the administrator is handling the distribution of assets. Probate can be a time-consuming and costly affair, with most of the expenses going to legal fees and fees for other experts like accountants and financial planners.
The Basics of Trusts
Unlike wills, trusts become active during the lifetime of the person creating the trust (also frequently called a grantor). Created by legal documents, a trust is where the grantor transfers ownership of assets to a trustee, who manages and distributes them according to the grantor’s instructions. Trusts offer a higher degree of flexibility and privacy compared to wills.
There are various types of trusts, each serving specific purposes. Living trusts, for example, allow the grantor to manage their assets while alive and provide a seamless transition of control in case of incapacity. Irrevocable trusts, on the other hand, cannot be altered or revoked once established, offering a higher level of asset protection. In most cases, a revocable trust becomes irrevocable upon the grantor’s death.
Privacy: Will vs. Trust
Wills and trusts are different when it comes to control and flexibility.
A will works after someone passes away and can be changed anytime up until their passing.You can update who gets your things or make other changes. But it has to go through probate, which can take time and cost more money.
On the other hand, trusts are active while the person who made it is still alive. Trusts, in most cases, do not need to go through the probate process, meaning that how and where your stuff goes does not become a public record and distributing your assets can be completed in a relatively short time. This privacy can be important for those who want their estate plans to be confidential.
Choosing the Right Path
The decision between a will and a trust depends on individual circumstances, preferences, and goals. While wills are more straightforward and suitable for many, trusts offer enhanced control and privacy. Some individuals may opt for a combination of both, using a will to address specific assets and a trust for more complex or private matters.
In conclusion, understanding the differences between wills and trusts is crucial for effective estate planning. Consulting with a lawyer you trust to help you based on your individual needs to make sure your wishes are carried how you want them to be. Click the link below to set up a meeting with O’Brien Estate Law, LLC, where we can discuss your specific situation and guide you towards a comprehensive estate plan.
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Remember, this information serves as educational and informational content only and is not a substitute for legal advice. Before making any changes to your estate plan, consult with a lawyer you trust to ensure your decisions align with your individual needs and circumstances.