What Are the Benefits of Each Estate Planning Tool?
You have worked hard to build up an estate, so that your loved ones will be protected after your death. It’s every bit as important to put an effective estate plan in place, one that clearly identifies how your assets will be divided, so that your survivors don’t have to try to figure that out on their own. If you’ve given some thought to your estate planning, you may have considered either a will or a trust, but need more information. What’s the difference between these two estate planning tools? Why would you choose one over the other?
What Is a Will?
A will is a valid and enforceable legal document that can set forth your wishes with respect to a wide range of issues, including:
- Who will oversee the execution of your will
- The distribution of your property upon death
- The payment of any debts or expenses of your estate
- The guardianship of minor children or others for whom you serve as legal guardian
Wills are governed by state laws, which can have different requirements. As a general rule, state laws require that a person executing a will be a certain age (usually 18) and be of sound mind. In addition, most states require that the will be in writing, and that it be witnessed and notarized.
All property that passes through a will must go through the probate process.
A will may be amended by a document known as a codicil, or by the preparation of a new will.
What Is a Trust?
A trust is a legal entity, created and governed by the terms of a trust document. A trust may be created during a person’s lifetime (an inter vivos trust) or by the terms of a will (a testamentary trust). As a separate legal entity, a trust has a wide range of powers, including the power to own property. The trust is typically managed by persons known as trustees, whose duties are set forth in the trust document. When property is transferred to a trust, it is no longer owned by the individual(s), so it does not pass through a person’s estate upon death.
What Are the Benefits of a Will?
A will is typically a much simpler document, with significantly less upfront costs. In addition, with a will, you don’t have to go through the process of retitling assets to a trust. That can be time-consuming, but it can also make it more difficult to obtain access to the property, should you want to sell it or make a gift of it. A will must also go through probate, but you may consider that a benefit, as you’ll have the oversight of the court in the distribution of property.
What Are the Benefits of a Trust?
For many, the major benefit of a trust is that it allows you to avoid probate. The probate process can be time-consuming and expensive…some attorneys will charge a flat fee of up to 7% of the net value of the estate to complete the probate process. When you put property into a trust, you avoid the costs of probate, which include filing fees, court costs and attorney fees.
Another advantage of a trust is that it provides far more privacy. Probate proceedings are a matter of public record. The details of a trust are entirely private and typically need only be disclosed to trustees and trust beneficiaries. Because a trust isn’t a public document, it’s rarely subject to challenge or contest.
As a general rule, creditors have a right to make claims against a will in probate. You can, though, include specific provisions in a trust that will protect it from creditors.
Contact the Proven Estate Planning Attorneys at Bailey & Galyen
At the law office of Bailey & Galyen, we understand the importance of setting up a plan to ensure the orderly distribution of your property after your demise. We offer a free initial consultation to every client. To schedule an appointment with an experienced and knowledgeable wills and trusts lawyer, Contact us by e-mail or 844-402-2992 call our offices at one of the convenient locations listed below. We will take your call 24 hours a day, seven days a week.