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Do I need a trust or a will?

On Behalf of | Dec 19, 2020 | Estate planning |

Wills and trusts are important tools for estate planning that share many similarities. Both allow you to formally state your wishes about what happens to your assets after your death. Both allow you to assert some degree of control over your estate. 

Wills and trusts are not the same thing. Understanding the differences between these devices may help you decide whether you need a will, a trust, or both. 

What is a will?

A will is a legal document that lists your instructions for the transfer of your assets, such as money and possessions, after you die. Some benefits of a will over a trust include: 

  • Inexpensive and quick to prepare 
  • May specify a guardian for minor children 
  • Allows you to state funeral preferences 
  • Covers any property that is in your name at your death 

One of the major disadvantages of a will is that your family will need to go through the probate process to transfer assets. This can take time and money. 

What is a trust?

A trust is a legal entity that takes ownership of your assets, with specific instructions for what may happen to those assets. There are many types of trusts. A revocable living trust, for example, becomes effective while you are still living, and allows you to make changes during your lifetime. Some advantages of a trust over a will include: 

  • Allows the transfer of assets without the need for probate 
  • May distribute property while you are still living 
  • May help protect assets from divorce or bankruptcy proceedings 

The major disadvantage of a trust is cost. A trust ordinarily costs more up front than a will but may cost your family less in the future. 

Remember, wills and trusts are not mutually exclusive. These devices can work together to create a complete estate plan.