Wills vs. Trusts - Which is Right for You?

Estate planning is an important step every person should take to secure their family's future. Two basic tools used in estate planning are wills and trusts. In this post, the estate planning attorneys of Thompson Legal will discuss the benefits and differences between these different estate planning tools to help you make informed decisions about your estate plan.

Note that this post is not exhaustive, and every situation is unique. Estate planning may result in unintended tax consequences, so it is always advisable to speak with an attorney before execution. Contact Thompson Legal to schedule a discovery call with an estate planning attorney.

Understanding Wills

A last will and testament, commonly known as a "will," is a legal document that outlines your wishes for the distribution of your assets after your passing. Here are some key benefits of having a will:

1. Simplicity and Affordability: Wills are relatively straightforward and cost-effective to create. They serve as a foundational document for many individuals, allowing you to express your intentions regarding your assets, guardianship of minor children, and even funeral arrangements.

2. Named Executor: You can appoint an executor in your will, someone responsible for carrying out your wishes, managing your estate, and distributing assets via probate according to your instructions.

3. Guardianship for Minors: If you have minor children, a will allows you to designate a guardian of your choice to care for them in the event of your untimely passing.

Understanding Trusts

A trust, on the other hand, is a legal entity that holds and manages assets for the benefit of specific individuals or entities. Here are some key benefits of using a trust in your estate plan:

1. Avoiding Probate: One of the most significant advantages of a trust is that it allows your assets to bypass the probate process. This can save time and money, as probate can be costly and time-consuming.

2. Privacy: Trusts offer a higher level of privacy because they are not typically part of the public record. Your assets and distribution plans remain confidential.

3. Control and Flexibility: With a trust, you can specify how and when your assets should be distributed to beneficiaries. You can even set conditions, such as age milestones, for distributions.

4. Managing Assets: A trust can manage and invest assets on behalf of beneficiaries, ensuring their financial security and ongoing support.

5. Incapacity Planning: Trusts can include provisions for managing your assets if you become incapacitated, providing an additional layer of protection.

Choosing Between a Will and a Trust

The choice between a will and a trust depends on your unique circumstances, goals, and priorities. In some cases, a combination of both may be appropriate. Here are a few considerations to help you decide:

• Complexity of Assets: If you have a straightforward estate with few assets, a will may suffice. However, for larger estates with various assets and properties, a trust can provide better asset management and distribution.

• Privacy Concerns: If you value privacy, a trust may be preferable, as it avoids the public probate process.

• Probate Avoidance: If you want to spare your loved ones the time and expense of probate, a trust can help achieve this goal.

• Control and Conditions: If you want more control over how and when your assets are distributed, a trust provides flexibility to set conditions and timelines.

• Family Dynamics: Consider any potential family disputes or special needs beneficiaries when deciding which tool best suits your situation.

Estate planning is an important time, and the choice between a will and a trust is not one-size-fits-all. The short-term and long-term benefits and disadvantages of both options should be considered. Contact Thompson Legal to speak with an experienced estate planning attorney and create an estate plan that aligns with your objectives.

This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with an estate planning attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.