Will vs Trust
Will vs Trust – Which Is Right for You? No matter your age, there is a necessity to plan for unforeseen circumstances. This includes planning for your death and deciding how you would like your property distributed. An estate plan allows you to do just this. Without an estate plan, the transfer of your assets will be subject to the intestacy laws of your state (link to other blog about dying without a will). This means you lack control of who administers your estate and who receives which assets, should you expire with no estate plan in place.
Many often wonder whether it is best to have a Will or a Trust for their matters after death. While this question is best answered on an individual basis, here are a few items to consider.
When a person dies with assets in their own name that exceed $184,500, a probate will be required. This does not include jointly owned property or assets that have beneficiary designations, e.g., P.O.D. accounts. If a probate is necessary, the Will must be filed with the court. Probates typically last around a year or so and can be very expensive depending on various factors.
By comparison, a Trust is often created to avoid probate. Similar to a “Payable on Death” or “Transfer on Death” bank account, the trust may be used to transfer the assets into the name of the beneficiary without going through probate.
Wills are less private than Trusts. In a probate, the original Will gets deposited with the court and a copy is attached to the petition for probate. This means that the Will becomes a public document after the death of the testator (creator). The Will can be viewed and contested by family members or anyone else who thinks they might be entitled to the property. Additionally, details about the assets within an estate, their values, and the names of the beneficiaries are all pieces of information that may become publicly available.
Trusts are private documents that remain private. While the existence of the Trust may become public record, the assets and beneficiaries do not. Because of the inherent privacy of a Trust, they tend to be less subject to dispute.
Complexity of Assets
Wills are more suitable for those with fewer, less complex assets. Additionally, a simple transfer—such as all assets being split equally between two children—can be another case where a Will may suffice.
However, a Trust may be ideal when your assets are more complex. A common example is when one has multiple real property holdings. Trusts may simplify the transfer process if you have real estate in multiple states. For example, imagine your primary residence is in California, you have a beach house in Florida, and a cabin in Maine. If you had a Will, this could necessitate probate in 3 different states. With a Trust, however, the assets could be transferred directly to the beneficiaries without probate. While you would have to ensure the deeds are in the name of the Trust, rather than in your name personally, this is, overall, easier than going through the probate process.Will vs Trust – Which Is Right for You?
Everyone’s estate planning needs are different. We encourage you to speak with qualified legal counsel and discuss an estate plan that is best for your needs. RJS LAW’s team of estate planning attorneys are here to answer all of your questions. Please call us at (619) 595-1655 or fill out the contact form on the right side of this page for a free consultation.
Written by Charles Ecker