Estate Planning

When it comes to planning for the future, the goal is simple—ensuring that your assets are distributed according to your wishes while providing for your loved ones. However, the tools to achieve this—wills and trusts—often leave many people wondering which is best for their estate plan. Understanding the key differences between the two can help you make informed decisions that align with your goals and circumstances.

What is a Will?

A will, also known as a “last will and testament,” is a legal document that outlines your wishes for the distribution of your assets after death. It also allows you to name guardians for minor children and designate an executor to manage the probate process.

Key Features of a Will:

1. Asset Distribution – Specifies how your property, money, and personal belongings are divided.
2. Guardianship – Allows you to name someone to take care of minor children or dependents.
3. Executor Appointment – Assigns someone to carry out the terms of your will.

While creating a will is a straightforward process, it does require probate, a court-supervised procedure to verify the document’s validity and oversee the distribution of assets. Probate can be time-consuming and incur costs, which should be considered in your overall estate planning.

What is a Trust?

A trust is a legal arrangement where you (the grantor) transfer control of your assets to a trustee, who manages them on behalf of your designated beneficiaries. Unlike a will, a trust can go into effect during your lifetime and provide ongoing management of assets.

Key Features of a Trust:

1. Avoid Probate – Assets held in a trust bypass the probate process, ensuring a quicker, more private distribution.
2. Customizable – Trusts can include specific conditions, like when beneficiaries can access funds (e.g., reaching a certain age).
3. Lifetime Management – A trust can be active while you’re alive, helping manage your finances in case of incapacity or illness.

There are several types of trusts, including revocable (which can be amended) and irrevocable (which cannot be changed). Choosing the right type depends on your financial and estate planning needs.

The Key Differences Between a Will And a Trust

Both wills and trusts serve as essential tools in estate planning, but they have distinct roles and benefits.

Pros/Cons of Wills & Trusts

Advantages of a Will:

• Simpler and cheaper to create.
• Allows you to designate guardianship for children.
• Suitable for smaller estates without complex needs.

Disadvantages of a Will:

• Requires probate, which can be lengthy and expensive.
• Becomes a public record during probate, limiting privacy.

Advantages of a Trust:

• Bypasses probate, ensuring quicker and private asset distribution.
• Provides ongoing asset management, even during your lifetime.
• Offers flexibility for conditional distribution of assets (e.g., setting up college funds).

Disadvantages of a Trust:

• More expensive and time-consuming to set up.
• Requires active asset management to ensure everything is properly transferred to the trust.

Which Estate Planning Tool Is Right For You?

The best choice between a will and a trust depends on your individual needs, goals, and the complexity of your estate. Consider the following:

A Will Might Be Right For You If:

• You have a smaller estate with straightforward distribution needs.
• You want a simple and cost-effective estate planning tool.
• You need to appoint guardians for minor children.

A Trust Might Be Right For You If:

• You want to avoid probate for greater privacy and faster distribution.
• You have a larger or more complex estate with specific conditions for beneficiaries.
• You need lifetime asset management in case of incapacity.

Can You Have Both?

Yes! Many people use a combination of a will and a trust to create a comprehensive estate plan. For example, a “pour-over will” can capture any assets not included in your trust at the time of your death, ensuring all your assets are distributed according to your wishes.

Final Thoughts

Creating an effective estate plan is not a one-size-fits-all approach. While wills and trusts each have benefits, the right tool depends on your specific circumstances, from the size of your estate to your privacy preferences and long-term goals.

If you’re unsure which option is best for you, consulting an estate planning attorney can provide clarity and help you design a plan tailored to your needs. Taking the time to plan today ensures peace of mind for you and your loved ones tomorrow. Contact Larsen, Larsen, Nash & Larsen today for estate planning help by calling (801) 964-1200 or fill out our online form. We look forward to working with you!