When it comes to estate planning, two common tools often come to mind: wills and trusts. But how do you know which you need? Both provide for distribution of your property after your death. However, wills and trusts operate differently and come with distinct advantages and disadvantages. Here, we’ll compare and contrast wills and trusts to help you make informed decisions about which option suits your needs best.

Wills: The Basics.

A will, also known as a last will and testament, is a legal document that outlines how a person’s property and assets will be distributed upon their death. Here’s a breakdown of its characteristics:

• Distribution of Assets: A will allows you to specify how you want your assets to be distributed among your beneficiaries. You can name individuals, organizations, or even create specific bequests, such as leaving a family heirloom to a loved one.
• Guardianship: For parents with minor children, a will is where you can nominate a guardian to take care of your children in the event of your passing.
• Probate Process: Upon your death, your will must go through a legal process known as probate, during which a court validates the will and oversees its execution. This process can be time-consuming and costly, potentially delaying asset distribution.
• Public Record: Wills become a matter of public record upon entering probate, which means the contents of your will, including the assets you have and who receives them, can be accessed by anyone.

Trusts: The Basics   

A trust, on the other hand, is a legal entity that holds and manages assets for the benefit of certain individuals or entities. Trusts offer a more comprehensive approach to estate planning:

• Distribution of Assets: Trusts allow you to distribute assets both during your lifetime and after your death. This flexibility enables you to provide ongoing support for beneficiaries.
• Avoiding Probate: Assets held within a trust usually avoid the probate process, resulting in quicker and more private distribution. This can save time and money for your beneficiaries.
• Privacy: Trusts offer a higher level of privacy since their contents typically remain private, unlike wills which become part of public records.
• Control and Conditions: With trusts, you can set conditions on how and when assets are distributed. For example, you can specify that a certain amount is to be distributed annually for educational purposes.

          Types of Trusts:

There are various types of trusts, including revocable (can be changed during your lifetime) and irrevocable (cannot be easily changed) trusts, as well as special needs trusts, charitable trusts, and more. Each type serves specific purposes.

Choosing Between Wills and Trusts: Factors to Consider Deciding between a will and a trust depends on your individual circumstances and goals:

• Complexity of Assets: If you have a complex financial situation, multiple properties, or significant investments, a trust might be more suitable to manage these assets efficiently.
• Desire for Privacy: If you value privacy and wish to keep your estate matters confidential, a trust can help you achieve this goal.
• Potential for Incapacity: Trusts often have provisions for managing assets in case of incapacity, which can provide a seamless transition without court intervention.
• Flexibility: Wills are typically easier to create and modify, while trusts offer more intricate control over asset distribution.

Wills and trusts are both valuable tools in estate planning, each offering distinct advantages depending on your specific circumstances and goals. Wills are suitable for simpler situations and offer a basic framework for asset distribution, while trusts provide a more comprehensive and flexible approach, often avoiding the probate process and providing greater privacy.

Ultimately, the decision between wills and trusts should be made after careful consideration of your assets, family dynamics, and future plans. Consulting with an experienced Estate Planning Attorney will help you navigate the complexities of estate planning and ensure that your wishes are carried out effectively.