How do wills and trusts differ?

by | Mar 28, 2024 | Estate Planning

An adult who is creating an estate plan is faced with many decisions. One of these involves determining how to better ensure that their assets are passed down to their intended recipients effectively. While it’s possible to give some assets away before they pass away, many assets will likely remain with the owner until they die. In these cases, a person’s will or trust will dictate how the assets are handled. If no will or trust is created, the state will decide “who gets what.”

While wills and trusts serve similar purposes, some differences dictate which is better for specific circumstances. Understanding the differences between these tools is vital for anyone who needs to engage in estate planning, so that they can make the decisions that best suit their needs.

Assets managed by wills and trusts

Wills are legal documents outlining how a person’s assets should be distributed after death. Wills can encompass a wide range of assets, including personal property and financial accounts solely in the will creator’s name without a designated beneficiary. Wills go through probate, a court-supervised process that can be time-consuming and public.

Trusts, particularly revocable living trusts, offer an option to manage and distribute assets both during the grantor’s life and after death without the need for probate. Trusts are ideal for holding assets such as real estate, significant bank or investment accounts and valuable personal property. Since trusts avoid probate, they can provide a smoother, more private transfer of assets to beneficiaries.

Considerations for choosing between wills and trusts

There are a few primary differences between wills and trusts. These include:

  • Privacy: Trusts are not public documents so trusts offer a way to keep the details private. Wills are entered into public record in probate court.
  • Complexity and cost: Setting up and managing a trust can be more complex and costly than preparing a will.
  • Flexibility and protection: Larger estates or those with complex assets, such as business interests or property in multiple states, may benefit more from the flexibility and protections offered by trusts.
  • Control over distribution: Trusts can provide more detailed control over how and when beneficiaries receive their inheritance. This isn’t possible with wills.

Because wills and trusts are cornerstones of an estate plan, anyone creating theirs should ensure they have legal assistance to better ensure that everything set up in a legally enforceable manner.


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