Understanding the difference between a will and a trust is important if you want to create a strong estate plan. Both are legal documents that can help you distribute your assets to your loved ones after your death, but each has different advantages and disadvantages.
Below, we will explain the main features of wills and trusts, how they work, and when you might need one or both.
Understanding the Difference Between a Will and a Trust
What is a Will?
A will is a document that outlines how you want your property and affairs to be handled after your death. In a will, you can:
- Name beneficiaries for your assets,
- Appoint an executor to manage your estate,
- Designate guardians for your minor children, and
- Express your preferences for your funeral and burial.
After your death, your will must go through a legal process called probate, where the court validates your will and oversees the distribution of your assets.
Some of the benefits of having a will are:
- You can decide who gets what from your estate.
- You can name guardians for your minor children, which can prevent family disputes or court intervention.
- You can choose an executor you trust to carry out your wishes and handle your affairs.
Some of the drawbacks of having only a will are:
- Your estate must go through probate, which can be expensive, lengthy, and public.
- Your will can be challenged or contested by anyone who has an interest in your estate or feels left out.
- Your will does not protect your assets from creditors, taxes, or lawsuits.
What is a Trust?
You can create a trust during your lifetime (called a living trust) or after your death through your will (called a testamentary trust). You can also choose whether your trust is revocable (meaning you can change or cancel it) or irrevocable (meaning you cannot).
A can provide more control over how and when your assets are distributed to your beneficiaries, such as by setting conditions or restrictions. A trust can also protect your assets from creditors, taxes, or lawsuits, depending on the type of trust you create.
Some of the benefits of having a trust are:
- You can avoid probate.
- You can provide for your beneficiaries in a more flexible and customized way.
- You can protect your assets from creditors, taxes, or lawsuits.
- You can plan for incapacity by naming a successor trustee who can manage your trust if you become unable to do so.
Some of the drawbacks of having only a trust are:
- You need to transfer your assets to the trust and keep them updated, which can be tedious and complicated.
- You may incur additional costs and fees to create and maintain the trust.
- You may lose some control over your assets if you create an irrevocable trust.
- You still need a will to cover any assets that are not in the trust or have no other way of passing to your heirs.
Do You Need Both?
The answer depends on your personal situation and goals. Generally speaking, most people need a will to ensure that their wishes are followed after their death.
However, some people may prefer to create a living trust instead of or in addition to a will, as it can offer more benefits than a will in terms of avoiding probate, protecting assets, and planning for incapacity.
The best way to decide whether you need a will, a trust, or both is to consult with an experienced estate planning attorney who can advise you on the best options for your situation.
At Jurado & Associates, P.A., we have the knowledge and expertise to help you create an estate plan that reflects your wishes and protects your interests.
We look forward to hearing from you and helping you with your estate planning needs.