If you are working on creating your estate plan, you have most likely heard the terms “Will” and “Trust.” Understanding the difference between the two is essential to decide which method is best to protect your family and assets.
With so many estate planning options, it can be overwhelming to determine which is better. Hiring an estate planning attorney to help you sort through the various options will make it less stressful and ensure that everything is done according to your wishes.
Below we will discuss the differences between a Trust and a Will and give you more clarity to help you decide which is best for your situation.
A Trust vs. A Will
There is quite a bit of overlap between the last will and trust; however, there are also several differences. While both are methods for leaving assets to your beneficiaries and heirs, they do it differently. Both wills and trusts have disadvantages and advantages.
One of the most significant differences between the two is how and when they take effect. A trust goes into effect immediately upon signing and funding it, and a will doesn’t go into effect until you die.
Will
A will is a more straightforward document. It allows you to:
- Name guardians for your pets and children
- Designate what happens with your assets and who will manage your estate
- Who are the beneficiaries of your assets and properties, and who is not
- Specify all final arrangements
- Leave instructions for your digital assets
- Mitigate the risk of potential family disputes
- Leave part of your estate, make a financial contribution to your favorite causes or leave a legacy
Creating a will is a more straightforward process, although it does have some disadvantages, which include the following:
- They offer limited control over the distribution of assets
- They almost always need to go through some probate
Even though a will is more straightforward, you may still want to hire an attorney for your last will to ensure it is written to reflect your final wishes accurately.
Trust
There are different types of trusts with varying requirements, benefits, and regulations. Setting up a trust is more complex; however, it can offer some great benefits, such as:
- They provide greater control over how and when your assets will be distributed with specific parameters
- All your assets inside the trust are included
- There are various types of trusts
- They may provide tax benefits
- Certain trusts are helpful during illness or disability, not just death
- Revocable trusts allow for flexibility
Irrevocable trusts are different because you cannot usually change them after the agreement is signed.
When you create a trust, you must also fund it by transferring assets and making the trust the legal owner. You will also need to conduct the trust’s business as you would a corporation or LLC, such as by filing an annual tax return and making distributions to beneficiaries. While the trust is a little harder to set up, the most significant benefit it has over a will is that a trust will often minimize or allow probate to be avoided entirely at the time of death.
Which One Is Better?
When considering a will or a trust, look at the specific benefits of each and your circumstances. Assess your situation, goals, and needs to find the best solution to help protect your family and assets. Hiring an estate planning attorney for guidance will ensure your family and your estate are cared for and protected.
Can You Have A Trust And A Will?
Yes, you can! They are two different things. A will allows you to name guardians for your kids, appoint an executor for your estate and clarify your final wishes. A trust will help to manage and distribute your assets during your lifetime and after your death.
The most important thing to understand is the type of will to have with a living trust to ensure that you have a comprehensive estate plan. This may be the ideal solution for anyone with a more significant estate with multiple beneficiaries. Using the last will and a living trust can ensure that your wishes are carried out as they desire and provides a high level of legal and financial protection for your family and entire estate.
Experience You Can Trust, Brackin Law Firm
At Brackin Law Firm in Baldwin County, Alabama, our experienced Estate Planning attorneys are here to assist you and your loved ones with planning for your future. Our highly skilled attorneys will ensure that your wishes for your estate and family are written and that your assets and family are protected.
Contact us today, schedule a consultation, and set up your living will, power of attorney, trusts, and other estate planning needs.