What is a Will?
A Will is a document that puts your intentions in writing so your family knows exactly what you want to happen when you’re no longer around. Wills are useful in documenting your wishes but generally don’t help to avoid probate.
Wills typically include:
- What you want to happen to your assets, such as your home and personal belongings
- Your intentions for guardianship of children
- Your wishes for burial or other arrangements
Common Types of Wills:
- Simple Will: guardianship, choosing an Executor and Beneficiaries for your estate
- Pour-over Will: used alongside Revocable/Living Trusts, a list of who should receive what when you die, with court supervision
- Living Will (Advance Healthcare Directive): document giving someone you trust permission and guidance to make medical decisions for you when you can’t make them or communicate yourself
- Joint Will: list intentions of two people, typically spouses
What is a Trust?
A Trust is a vehicle created to hold and protect your stuff for your kids without court involvement. Trusts allow you greater control over what happens both during your lifetime and after your death. They protect your assets, which helps your loved ones avoid probate. Trusts also allow you to prepare in the event that you are no longer able to make decisions regarding your health.
Trusts typically include:
- A plan for the distribution of your assets
- Designation of an Executor, Trustees
- Designations for Financial Power of Attorney and future medical decisions
Types of Trusts
- Living/Revocable Trust: can be modified at any time
- Irrevocable Trust: can’t be modified once signed
Differences between Wills and Trusts
The main difference between Wills and Trusts is that Trusts help to avoid probate while Wills don’t. Wills take effect after death, while Trusts take effect as soon as they’re signed. You can use a Will to communicate your intentions for after your death, but they don’t protect your assets as Trusts do.
Wills
- Don’t avoid probate
- Take effect after death
- Don’t protect assets from court
- Not funded
- Accessible to the public
Trusts
- Help avoid probate
- Take effect as soon as they’re signed and funded
- Protect assets
- Must be funded (contain assets)
- Private documents
What are the special considerations?
It’s important to consider the possibility of your estate going through probate. This process includes attending court hearings, legal and court fees, and can take awhile to get settled. If you have any privacy concerns, note that Wills are accessible to the public while Trusts are confidential documents.
A crucial part of Trusts is that they have to be funded, which means that you have to transfer ownership of your assets, such as the deed to your home, to the Trust. When you add assets to a Trust, their titles of ownership must state that they belong to the Trust, instead of to an individual. After this, you can list the people who will receive what you’ll leave behind. If this isn’t something you’re prepared to do, a Will might be a better option for your needs.
Conclusion
It’s always best to prioritize estate planning by making sure that you have a Will or Trust prepared. Each has their own benefits that allow you to plan for the future and choose what will happen to your loved ones and your things. The biggest difference between Wills and Trusts is that Wills usually have to go through probate while Trusts help to avoid probate. As you explore your estate planning options, think about the resources that you’re able to put into the process, such as attorney fees.
