Should You Have a Will or a Living Trust?

When sorting out their legal affairs, people often have to decide whether to use a will or a trust as the primary legal instrument to pass their estate onto their loved ones. If you have not created a will or a trust yet, we would like to provide some tips to get you started on the right track.

What is the Difference?

Before we get into providing a recommendation to you, let’s focus on outlining the differences between a will and a trust.

will is an instruction letter to the probate court that outlines one’s exact wishes for the distribution of their estate after their passing. They can be adjusted or revoked as needed, and they allow the creator to appoint a guardian for minors if necessary.

Like a will, a living trust allows one to name the recipients of their assets after their passing. The key difference here is that the creator appoints a third party to handle the distribution of assets without going to probate court. Living trusts are actively adjusted while the creator is alive, and the listed assets do not have to go through probate court after their passing.

Which Should You Choose?

The decision of whether to create a will or a trust is a significant one, and we would prefer to speak to you directly and explore the nuances of your situation before giving a concrete recommendation. Even still, we do have some tips you will want to consider as you begin the endeavor of creating your estate plan.

Typically, the initial cost of a will is cheaper than a trust. But that initial savings can cost you and your beneficiaries thousands of dollars in the long run. Unlike wills, trusts come with a host of benefits which may make them stand out as the better choice depending on your situation:

  • Trusts avoid the probate process, whereas wills do not. Probate is a lengthy process that can delay the transfer of property and lead to additional paperwork. With a trust, an immediate transfer can take place.
  • If you have a child or grandchild with a disability, a will could potentially cause them to lose their Social Security or Medicaid benefits. A trust will make the assets accessible without these losses.
  • Trusts can safeguard beneficiaries’ assets from creditors who might be targeting them. Since they are in the name of the trust rather than the beneficiary, things like bankruptcy and business losses cannot trigger a loss of inheritances with the right trust.
  • Unlike a will, a trust allows minors to receive assets without court intervention. Rather than using a guardianship to manage the inheritance, a trust allows someone you trust to handle the distribution of assets to your children. This gives you the power to immediately offer the inheritance and allow it to be used for specified purposes only or provide the inheritance after a specific age is reached.