Will vs. Trust: Which One is Right for Me?
A will and a trust are documents that dictate and ensure the transfer of your property after death. However, they are handled differently when it comes to carrying out distributions. The first step is understanding the difference between a will and a trust.
Will:
Defines what you own and how your real property, personal property, and assets will be distributed upon death.
Goes into effect after you pass away.
Probate process is required through the court system which can take 6-8 months for distributions to take place.
Does not keep your assets and property private as probates are public record.
To make changes, you need to sign a new will.
Trusts:
Defines what you own and how your real property, personal property, and assets will be distributed.
Goes into effect when funded.
Allows creativity on how to manage your funds while alive, when you get married, incapacitated, young children, and/or older children that may need a trust to limit spending.
Allows protection of separate property that you currently own prior to marriage.
Probate process is avoided by assigning all real property, personal property and assets to the trust.
Keeps your assets and property private.
To make changes, you can amend and modify the trust.
A pour-over will is drafted to cover any future purchases that may accidentally not get placed in the trust. If this happens, then probate will be required to transfer accordingly.
Frequently Asked Questions:
Which is better? Both get you from point A to point B. It really depends on your opinion regarding complexity, price, and more work now, versus less work and expense for your beneficiaries later on. If you are constantly changing assets, as in, if you often change bank accounts or residences or businesses you own, maintaining a trust would likely be more burdensome than worth it. However, if you are well settled with your assets and have beneficiaries who would be better suited to not have to handle your estate more formally, a trust can be a great option.
What tax advantages are there with a trust? Any tax advantages for your estate can be done with a will or a trust.
Do I have to put my house in the trust? No, but if you own the house jointly, probate will be required to remove the deceased individual’s name. We recommend placing the house in the trust to avoid probate. You are still able to keep any and all exemptions you currently have with the appraisal district.
How is life insurance treated? We assist you with drafting a beneficiary designation so that your trust is named as the beneficiary. It is up to you to provide the signed beneficiary designation to your life insurance company to ensure it is updated correctly.
Give us a call at 512-374-4922 or emails us at hello@hardiealcozer to speak with one of our attorneys about what estate planning tools are best for you.