Wills and trusts are fundamental components of estate planning, serving as legal tools to distribute your assets among your loved ones after your passing. However, these two documents work differently in various aspects.
When They Become Effective
When they take effect, wills become effective only upon your death, while trusts take effect immediately after signing and transferring assets to the trust (also known as “funding” the trust). A will designates asset distribution after death, whereas a trust specifies how assets are managed and distributed both before and after death, including in cases of incapacity.
Probate
An important distinction is that a will solely governs assets owned in your name, excluding joint tenancy properties and assets with beneficiary designations like life insurance policies, IRAs, and 401(k)s. On the other hand, a trust covers assets that have been transferred to the trust or where the trust is designated as the beneficiary. It is crucial to work with an Estate Planning Lawyer to ensure proper funding of the trust.
To learn more about Probate, and why it is important to get a trust in order to avoid probate. Check out our Vlog, where we explain what probate is, and what it entails.
Administration
Administration differs significantly between wills and trusts. Wills on their own require probate, a court-supervised process to ensure asset distribution aligns with your wishes. Probate can be lengthy, costly, and may result in disputes among family members. Conversely, trusts bypass probate, saving time, money, and potential conflicts, while also maintaining privacy.
Cost:
Regarding costs, will-based estate plans are generally less expensive upfront compared to trust-based plans. However, probate costs for wills can be high, making trusts potentially more cost-effective in the long run. The best approach varies for each family, considering individual circumstances, assets, and preferences.
What is Best for You
To determine the most suitable solution for your family, consult an Estate Planning Lawyer for a Legacy Planning Session. This comprehensive process will help you select the right planning tools at the appropriate fees, tailored to your needs and your loved ones’ welfare.
Take advantage of our Legacy Planning Process, where we analyze your assets and priorities to devise a personalized estate plan. By meeting with your Estate Planning Lawyer, you’ll gain full confidence in your chosen estate planning approach, considering your unique situation, family dynamics, and budget. Schedule an appointment today to get started.
