There are many differences between drafting a will and trust, but both options are great for securing your financial future.
The time has come to secure your assets for the future; the first step is to choose between a will and trust. Both options allow you to pass on your property as you see fit, but the manner of doing so can differ significantly. Keep these key differences in mind as you choose your ideal estate planning approach.
Many people pursue trusts rather than wills because, when handled correctly, trusts allow them to avoid the expense and hassle of the probate process. During probate, the court establishes the validity of a will. The executor is responsible for presenting a thorough accounting of all assets and debts, as well as individuals who will receive property. This process can last as long as a year, proving problematic for beneficiaries who require prompt access to the promised property.
The desire to avoid probate is understandable, but estate holders should keep in mind that probate is not always the disaster they assume. The cost and timeline for probate vary from one state to the next; in some cases, a will might be worth pursuing, even if probate proves necessary. Furthermore, there are circumstances in which even a trust can fail to prevent probate. For example, if the grantor fails to transfer assets before his or her death, the trust will not offer any probate protection beyond that of a standard will.
Probate is a public affair. Once submitted to the local court system, anybody can access the will. This is problematic for those who prefer to keep their financial affairs private. In such situations, a trust is a better option. That’s because it is a private contract between the grantor and the trustee. Only beneficiaries and the successor trustee can see the contents of the trust, unless a lawsuit challenges the trust’s validity.
Although wills are primarily designed to handle financial considerations, such as property division, they can also designate guardianship for children under the age of 18. Trusts do not name guardianship, but they can include provisions outlining when and under what circumstances children can access assets.
Cost Considerations for Wills and Trusts
There are considerable expenses attached to both wills and trusts. Trusts are by far more expensive on an upfront basis. Management is necessary throughout the life of the trust. This can prove quite costly, depending on how long the grantor lives or when the beneficiaries can legally access to the assets held in the trust. But ultimately, the most costly option in the long-term is no estate plan at all.
No single estate planning solution fits every situation. If the difficult decision between will and trust causes you frustration, it may help to talk to our team at Incompass. Contact us at (916) 974-9393 to learn more about estate planning.