Those who decide to draft estate plans are already ahead of the curve. A substantial portion of adults in the United States fail to establish estate plans at all. They may convince themselves that their circumstances do not warrant an estate plan or that they have time to plan in the future.
Those who do establish estate plans often try to keep the process as simple and fast as possible. For example, they might draft a will and then rely on that one document for all of their family’s needs. Others tried to create the most in-depth plans possible, possibly by creating a trust.
Both wills and trusts can serve as the primary testamentary instrument in someone’s estate plan. What are the differences between wills and trusts that help people choose which one(s) to use?
Wills are simpler
A will is a very basic legal document. It is a record of someone’s personal wishes regarding the care of dependent family members and the distribution of their property. A will guides the probate process and leads to beneficiaries receiving immediate control over certain resources. It allows someone to designate a guardian for their children, to provide guidance for memorial services and to leave clear instructions about the distribution of their property. Wills are typically faster and cheaper to create than trusts but do not offer the same level of comprehensive protection that a trust can.
Trusts offer more control
Unlike a simple will, which allows someone to address a handful of legal concerns in very specific ways, trusts can achieve a broad assortment of different estate planning goals. Testators can leave resources to provide for minor children, loved ones with special needs or pets. They can arrange for long-term joint ownership of assets ranging from businesses to real estate. Trusts can limit when people access inherited resources and how they use them.
Unlike wills, which are legal instructions, trusts are their own separate legal entities. They can hold property indefinitely for a trustee to manage and distribute. They can allow someone to skip generations when providing an inheritance or leave resources for charitable causes. Trusts provide a degree of separation between beneficiaries and the resources intended to enrich their lives. Some people decide to use both trusts and wills when creating estate plans to have the maximum control possible over their legacies.
Choosing between a will and a trust, or even selecting the right type of trust to be executed alongside a will, can make a major difference for someone establishing an estate plan. Those who understand the usefulness of different estate planning tools can choose the right options given their personal circumstances and the legacy that they hope to leave after they die.