Estate planning is about clearly communicating how you would like your assets distributed after your death and making the distribution process as easy as possible. Two of the most common tools are a will and a trust.
What a Will Does
A will is a legal document that allows you to direct the distribution of your assets after your death. It can also name the person who be responsible to distribute the assets and answer to the probate court who oversees the distribution of the assets. If you have minor children a will can assist the Court to determine who a preferred guardian would be.
For many people, a will is the most basic starting point. It gives direction, answers important questions, and helps prevent unnecessary confusion.
But a will does have limits. Assets transferred by a will must be transferred as soon as practicable and if you have young beneficiaries, you may not want to put them in charge of that asset until they are older. The distribution of assets by will also require involvement of the probate court which adds costs and extends the time required to distribute.
What a Trust Does
A trust is a legal arrangement that holds assets for the benefit of another person(s). In estate planning, a revocable living trust is often used to help manage assets during your lifetime and transfer them after death.
Unlike a will, a trust can often help assets pass outside of probate. It may also make things easier if you become unable to manage your own affairs, because a successor trustee can step in and handle trust assets. Through a trust, you can instruct the trustee to distribute the assets at a time in the future. A trust can offer more privacy, more flexibility, and a smoother transition in certain situations.
But trusts also have limitations. If your assets is not properly titled to the trust, the trust cannot control or distribute the asset. Trusts are more expensive and have no court supervision to insure the trust assets are being properly administered A trust gives the beneficiaries limited powers and access to trust information
Which One Do You Need?
That depends on your circumstances. A will may be enough if your situation is fairly simple and you want a straightforward plan in place.
A trust may make sense if you want to avoid probate, own property in more than one state, have more complex family or financial circumstances, or want added flexibility.
And in many cases, the answer is not one or the other. A solid estate plan may include both.
The Bigger Problem: Having No Plan
The biggest mistake is often not choosing between a will and a trust. It is doing nothing at all.
Without a plan, the law decides how certain assets are handled, and that may not reflect what you would have wanted. It can also create extra stress, delay, and expense for the people left to sort things out.
The Bottom Line
A will is often the basic foundation of an estate plan.
A trust can provide added control, privacy, and convenience in the right situations.
The right choice depends on your family, your assets, and your goals. What matters most is having a plan that fits your life, and protects the people who matter most.
If you have questions about whether a will, a trust, or a more complete estate plan makes sense for your situation, speaking with an attorney at KB can help you make that decision with confidence.