Both wills and trusts are estate planning documents used to pass on wealth and property to loved ones upon death. However, trusts come with some distinct advantages over wills that you should consider when creating your plan.
That said, when comparing the two planning tools, you won’t necessarily be choosing between one or the other—most plans include both. Indeed, a will is a foundational part of every person’s estate plan, but you may want to combine your will with a living trust to avoid the blind spots inherent in plans that rely solely on a will.
Here are four reasons you might want to consider adding a trust to your estate plan:
1. Avoidance of probate
One of the primary advantages a living trust has over a will is that it does not have to go through probate. Probate is the court process through which assets left in a will are distributed to heirs upon death.
During probate, the court oversees your will’s administration, generally supervising distributions under your will and applicable law, including any disputes. Probate proceedings can drag out for months or even years, and your family will likely have to hire an attorney to represent them, which can result in costly legal fees that can drain your estate.
Bottom line: If your estate plan consists of a will alone, your family may need court proceedings if you become incapacitated or when you die.
However, if your assets are titled properly in the name of your living trust, your family could avoid court altogether. Assets properly transferred into a trust can generally pass under its terms without probate, though court involvement may still be needed. This can save your loved ones significant time, money, and stress while dealing with the aftermath of your death.
2. Privacy
Probate is not only costly and time-consuming, but it’s also public. Once in probate, your will becomes part of the public record. Anyone can see details about your estate, your beneficiaries, and even how much your loved ones inherit. This makes them targets for fraud and scammers.
Using a living trust, the distribution of your assets can happen in the privacy of our office, so the contents and terms of your trust generally involve less public disclosure than probate. Court proceedings or other legal requirements can make some trust information public.
3. A plan for incapacity
A will only applies to the distribution of your assets upon your death. It offers zero protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. If you become incapacitated with only a will in place, your family will have to petition the court to appoint a guardian to handle your affairs.
Like probate, guardianship proceedings can be extremely costly, time-consuming, and emotional for your loved ones. And there’s always the possibility that the court could appoint a family member you’d never want making such critical decisions on your behalf. Or the court might even select a professional guardian, putting a total stranger in control of just about every aspect of your life.
With a living trust, however, you can include provisions that appoint someone of your choosing—not the court’s—to handle your assets if you’re unable to do so. Combined with a well-drafted medical power of attorney and living will, a trust can keep your family out of court and conflict in the event of your incapacity.
4. Enhanced control over asset distribution
Another advantage a trust has over just having a will is the level of control they offer you when it comes to distributing assets to your heirs. By using a trust, you can specify when and how your heirs will receive your assets after your death.
For example, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. Or you might spread out the distribution of assets over your beneficiaries’ lifetimes, releasing a percentage of the assets at different ages or life stages.
In this way, you can help reduce the risk of beneficiaries spending their inheritance too quickly, and offer incentives for them to demonstrate responsible behavior. Depending on the trust terms and applicable law, assets held in trust may have protection from some beneficiary creditor, lawsuit, or divorce-related claims.
If, for some reason, you do not want a living trust, you can use a testamentary trust to establish trusts in your will. A testamentary trust will not keep your family out of court, but it can allow you to control how and when your heirs receive your assets after your death.
An informed decision
One way to discuss whether your estate plan should include a living trust, a testamentary trust, or no trust at all is to meet with your Personal Family Lawyer® for a Family Wealth Planning Session. During this process, we’ll take you through an analysis of your personal assets, your family dynamics, what’s most important to you, and what will happen for your loved ones when you become incapacitated or die.
Sitting down with us to discuss your family’s planning needs will empower you to feel 100% confident that you have the right combination of planning solutions in place for your family’s unique circumstances. Schedule your appointment today to get started.
This article is a service of AMO LAW, Personal Family Lawyer®. We don’t just draft documents; we help you make informed decisions about life and death, for yourself and the people you love. That’s why we offer a Legacy Planning Session, during which you can become more financially organized and consider planning choices for the people you love. You can begin by scheduling a Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
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