Do I need a will or a trust?
While both wills and trusts can help you transfer your assets to your loved ones, they operate differently. An estate planning attorney can help you determine which tool is best in your particular situation, but the basics of how each document works are outlined below.
What are the differences between a will and a trust?
Assets that pass via a will must go through the probate process. Assets that pass to your loved ones via a trust avoid probate entirely.
Trusts are private documents, but wills must be filed with the probate court when you pass and become public documents.
Trusts allow you to specify the age at which your loved ones can directly access their inheritance and the people who will manage the assets on behalf of your loved ones until that time. In contrast, when assets pass via a will, those assets will be directly distributed to your named beneficiaries after you pass, without restriction.
When does a will make sense?
A will can be used to accomplish your estate planning goals if you do not have any minor beneficiaries, do not need to control how or when your loved ones would receive any inheritance, and are not concerned about your ability to manage your own assets during your lifetime.
Because a will is simply an instruction manual to the probate court, you can identify those loved ones who you would want to inherit your assets, but once the probate process has finished, your loved ones would receive those assets outright, without limitations on how or when those assets are used.
When does a trust make sense?
Using a trust as your primary estate planning tool makes sense if you want to have some control over how and when your loved ones can receive or control their inheritance or if you have concerns about your ability to manage your own assets during your lifetime.
A trust is a very effective tool to provide for minor (or young adult) children or grandchildren with an inheritance. Using a trust, you can choose a trustee who can manage and distribute any assets for the benefit of your loved ones until your loved ones reach an age at which you believe they will be able to responsibly control those assets themselves. Further, if you have concerns about being able to manage your own assets during your lifetime, a trust will allow you to choose the individual(s) who will manage and distribute those assets for your benefit during your lifetime.