May we all live a long and healthy life. And yet, death and incapacitation are factors we must consider. Check out this article on Will and Trusts and the differences between the two financial/legal instruments.
It’s a good idea for every senior to decide what they want to happen to their estate after they pass away. Laying out clear instructions for your legacy is one of the kindest things you can do for your loved ones. Trusts and wills are two avenues you can use to outline your end-of-life wishes. But what’s the difference between them, and which one is the right option for you?
Wills vs.Trusts
A will, or last will, is a legal document that explains how you want your assets distributed after you die. This includes physical property — like your house, car, and pets — and financial assets, like your bank and investment accounts. With a will, you can also name a legal guardian for your minor children if you have any.
A trust is a legal arrangement in which you transfer your assets into the trust and name a trustee to manage them. This means that the trust “owns” all your assets, and your trustee oversees them. Many people call themselves the trustee of their trust, which allows them to use and control their property while they’re still alive. If you choose this route, you should name a successor trustee. This person will manage your trust after you pass away or become incapacitated.
There are many different types of trusts, but they all fall into two categories: revocable (can be revoked or changed) and irrevocable (usually can’t be changed without a court order). Both have benefits and drawbacks, but revocable trusts are more common due to their flexibility.
If you require sound advice and guidance on Trust vs. Will, we recommend contacting Senior Resource Connectors. We’re part of their Arizona coalition of trusted professional services that cater to all forms of senior needs, including all senior legal and financial issues. They can provide a trusted referral to one of their coalition members here in Phoenix to assist you with anything will or trust-related. Contact us directly for more guidance if you need urgent assistance.
What’s the Difference Between a Will and Trust?
Trusts and wills will perform a similar function: they allow you to distribute your assets to the people you want to have them after you die. But, legally, they do this in different ways. There are several differences between trusts and wills, but here are three big ones:
1. Assets in a trust don’t have to go through the probate process, but wills do.
Probate is the legal process of distributing your estate after you die. A court oversees the process to ensure your debts are paid, and your final wishes are followed.
Probate court can be expensive and lengthy, so some people opt to create a trust. Assets in a trust don’t need to go through probate court, so your heirs can receive their assets much quicker.
2. Trust proceedings are private, while will proceedings are not.
Probate proceedings are public records, meaning anyone can request and access them. On the other hand, trusts are private records that can attract those looking to protect their heirs’ privacy.
3. Trusts generally require more maintenance than wills.
Trusts are most valuable when they’re kept up-to-date with all your property. For example, any time you acquire a new asset — like a home, vehicle, or bank account — you would ideally transfer that asset to your trust as soon as possible. As a result, your trust will need continuous maintenance since you’ll likely continue to acquire new property throughout your life.
Wills are typically considered “lower maintenance” than trusts. If you have a will, estate attorneys recommend updating it every three to five years or whenever you have a significant life event, such as getting married or having a child.
Trusts have the potential to be more complicated than wills and might require an attorney. However, many can still set up a trust on their own. Wills can also be made for free online.
Everyone should be planning for end-of-life — whether with a will or a trust. By planning ahead, you can be confident that you’re protecting your loved ones and cementing your legacy.