You may have heard that trusts are better than wills, or vice versa. Both estate planning tools are used to distribute assets and property, and each has its advantages and disadvantages. Some of the differences between Wills and Trusts are highlighted below:
Privacy: Once filed with the county probate court, a Will becomes a public document. A trust is not filed with the court, and a fully-funded trust may allow for full asset distribution without court involvement.
Funding: A trust will not exist without trust property. To avoid the probate process, all property must be re-titled in the name of the trust. This can be time consuming and costly. A Will (and trusts created in a Will) is not funded until death and a properly worded Will may dispose of all property efficiently with less initial cost.
Providing for Minors: A trust allows the trust creator (Settlor) to determine how much of an asset a minor should receive, and when. It allows the Settlor to have more control over the disposition of the asset. Many clients set up trusts within their Wills to provide for minor children.
Creditor Protection: Trust property may be protected from creditors so long as the Settlor names a Trustee other than himself and retains no control over the trust property.
Probate: A carefully worded and funded Trust is not subject to probate upon the death of the Settlor. The property passes according to the terms of the trust. This reduces expenses after death. However, probate would still be required for any property or accounts that was not included in the trust.
Trust provisions may be added to a Will (referred to as testamentary trusts) to accomplish some of these goals. To discuss which estate planning tool may be best for you, contact us for a free consultation.