What are the Five Differences Between Wills and Trusts?
There are two options available for a person to plan for financial succession and distribution of assets: the creation of a last will and testament or an establishment of a living trust. Both options are effective in legally distributing assets like land estates and money. However, there are big differences between the two. You must choose the right estate-planning tools to avoid undesired consequences.
If you need legal assistance in setting up trusts and wills, contact an experienced estate lawyer today.
Protecting your financial legacy and family’s assets will require much estate planning and research. To help you with your decision regarding your estate plan, we have created a list indicating the five significant differences between wills and trusts:
1. A Will requires a public process; a Living Trust is a private document
A Will usually involves probate; a legal process enacted by the court where all unpaid debts are repaid to creditors and all assets and properties are redistributed to a trustee after the death of the testator (the author of the will). A probate process may usually last for up to five months, or even up to 9 months for contested wills. Attended by family members, heirs, and creditors; these people will know how much debt you have, how big your estate is, who will be your devisee/s (to whom you will leave your real estate), and beneficiaries.
If you wish to avoid probate, having a trust instead of a will is a good option for you. Avoiding probate is possible in a living trust, or inter vivos trust, for it is a private document that doesn’t require intercession from a court. It may be accomplished in the deceased person’s attorney’s office. In a living trust, the process is usually faster and costs less than when you process a will in probate courts. A trust can also provide you with privacy for when and how you transfer your assets to the beneficiaries of the trust.
2. A Living Trust permits delays in an estate distribution
A living trust would be your best option if you require certain conditions to be met before the distribution of your estate assets, or if you want to have full control over your estate administration. You may ask an estate planner to specify certain requirements that must be accomplished before anyone can claim an inheritance, like reaching a certain age (for minors), being clean from illegal substances, alcohol, or gambling. You may also opt to revoke or hold off the distributions of inheritance for beneficiaries who are divorced, with disabilities or are incapacitated, or have unpaid debts. Another option you have is to have the inheritance given in terms, or monthly payments, or give only a certain percentage of the total inheritance once a milestone is reached. To show the benefits of trusts, think about a trust beneficiary who is forced to file for bankruptcy. If the heritage has been given right away, it will be used to pay off debts in the bankruptcy estate. However, if the inheritance is released only after the debts are discharged, the trust money will only be received by the beneficiary after bankruptcy.
3. Estate Planning for a Living Trust is less expensive than for a Will.
If costs are one of the main considerations you have for your planning, a trust might be your best option. State laws require that a will go through probate, a legal process where a will is reviewed to determine whether it is valid and authentic. A probate court appearance might involve paying for legal fees, county taxes, and executor fees, among others. Probate costs, along with the expenses in will planning and processing may consume almost 10% of your properties, such as a house, and other investments.
Additionally, the deceased’s loved ones may be obliged to go through the process of probate more than once if the properties are located in different states, as formal will requirements and estate law vary by jurisdiction.
4. A Trust has tax benefits.
You might likely save on federal estate taxes when you opt for a trust instead of a will. If you are an unmarried grantor, you may opt to include a provision in your trust to use your estate tax exemption, or if you are a married couple, you may opt to use your and your spouses’ tax exemptions to arrive at a lesser amount on your estate tax.
5. A will must be assessed by a legal attorney to consider it legally valid.
For a will to be considered valid, it must first be validated by a lawyer before the testator, the author of the will, passes away.
How We Can Help
The process of estate planning can be complex, and the processing time may vary between individuals and families. Consult with a trusted estate planning lawyer in Tacoma today to help you make the right choice.
Start your estate planning with Jones Estate Law and schedule a free estate planning strategy session with one of our estate planning attorneys or call (253) 303-5823 today.