When I tell people that I am an estate planning attorney, most people know that they need a Will. Indeed, Wills have been the most popular method for passing on assets to heirs for hundreds of years.
Trusts, which used to be only available to the very wealthy, are now being used by people of all income levels and asset values to help protect their assets and keep their loved ones out of the court process.
But determining whether a Will or a Trust is best for you depends entirely on your personal circumstances. And the fact that estate planning has evolved so much makes choosing the right tool for the job even more complex.
That said, when comparing the two planning tools, you will not necessarily be choosing between one or the other—most plans include both. Indeed, a Will is an essential part of every person’s estate plan, but you may want to combine your Will with a Living Trust to take advantage of some key features of a Trust.
It is important to understand what Wills and Trusts do and some key differences between them. As comprehensive estate planning attorneys, we can help you determine your goals and objectives and find the best plan for your assets and your family.
One of the primary advantages a Living Trust has over a Will is that a Living Trust does not have to go through probate. Probate is the court process through which assets left in your will are distributed to your heirs upon your death.
Probate is not only costly and time consuming, it’s also public. Once in probate, your Will becomes part of the public record. This means anyone who is interested can see the contents of your estate, who your beneficiaries are, as well as what and how much your loved ones inherit, making them potentially tempting targets for frauds and scammers.
Using a Living Trust, the distribution of your assets can happen in the privacy of our office, so the contents and terms of your trust will remain completely private. The only instance in which your trust would become open to the public is if someone challenges the document in court.
Planning for Incapacity
A Will only governs the distribution of your assets upon your death. It offers zero protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. If you become incapacitated with only a Will in place, your family may have to petition the court to appoint a guardian to handle your affairs.
With a Living Trust, however, you can include provisions that appoint someone of your choosing—not the court’s—to handle your assets if you’re alive but otherwise unable to do so. Combined with a well-drafted medical power of attorney and health care directive, a Living Trust can keep your family out of court and conflict in the event of your incapacity.
How to Distribute Assets
Another advantage a Trust has over just having a Will is the level of control it offers you when it comes to distributing assets to your heirs. By using a Trust, you can specify when and how your heirs will receive your assets after your death.
For example, you could stipulate in the Trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. Or you might spread out distribution of assets over your beneficiaries’ lifetime, releasing a percentage of the assets at different ages or life stages.
In this way, you can help prevent your beneficiaries from blowing through their inheritance all at once, and offer incentives for them to demonstrate responsible behavior. Plus, as long as the assets are held in Trust, they are protected from the beneficiaries’ creditors, lawsuits, and divorce, which is something else wills may not provide.
If, for some reason, you do not want a Living Trust, you can use a Testamentary Trust to establish trusts in your Will. A Testamentary Trust will not keep your family out of court, but it can allow you to control how and when your heirs receive your assets after your death.
What Is Covered?
A Will covers any property solely owned in your name. A Will does not cover property co-owned by you with others listed as joint tenants, nor does your Will cover assets that pass directly to a beneficiary by contract, such as life insurance.
Trusts, on the other hand, cover property that has been transferred, or “funded,” to the trust or where the trust is the named beneficiary of an account or policy. That said, if an asset has not been properly funded to the trust, it won’t be covered, so it is critical to work with us as your comprehensive estate planning attorney to ensure the trust is properly funded.
Unfortunately, many lawyers and law firms set up trusts, but do not then take the time to guide clients in getting their assets properly re-titled or beneficiary designated, and the trust does not work when their family needs it. We have systems in place to help you and guide you in transferring assets to your trust and so that they are properly owned at the time of your incapacity or death happens with ease and convenience.
Is a Will or a Trust Best for You?
If you have a Will but think that maybe a Trust would be better for your family, or you do not have a plan yet and want to put something in place, give our office a call for your complimentary Estate Analysis Planning Session where we will review your goals and objectives and find the right plan for your family and your assets.