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According to CNBC, a survey was conducted with results showing a staggering 67% of Americans have no estate plan!
Making a will and creating a trust are two important steps we should all understand and take to protect our loved ones.
But what is the difference between wills and trusts? Is one better than the other?
This article will explore the key differences between wills and trusts to aid you in your decision.
Here is my youtube video if you prefer to watch instead. 🙂
Related Content: Generational Wealth | What is it and How to Build it
Table of Contents
What Is a Will?
A will is a legal document that allows you control over how your property and assets will be distributed after passing. You can use a will to:
- Specify who will receive your property and assets.
- Designate a guardian for your minor children.
- Appoint someone to manage your estate.
Creating a will is one of the most important things you can do to protect yourself and your family. If you die without a will, state laws will determine the distribution of your property.
This could be scary because it may not be by your wishes.
Additionally, if you have minor children, the court will decide who will care for them if you do not designate a guardian in your will.
While it is important to have a will, it is also important to keep it up to date. You should review your will periodically and make changes as needed to ensure that it accurately reflects your current wishes.
You may also consider updating your will if you experience a major life event.
For example, if you are planning on marriage, having children, or buying a new home.
If you have questions about creating or updating a will, you should consult an experienced estate planning attorney.
An attorney can help you understand the laws in your state and ensure the proper execution of your will.
Contacting an attorney early on can also help you avoid potential problems. Creating a will may seem daunting, but it’s worth looking into.
It’s important to take the time to ensure that your wishes are carried out after your death.
By taking some simple steps, you can give yourself and your loved ones peace of mind.
Knowing that your affairs are in order will give you a sense of relief.
An attorney can help you understand the laws in your state and ensure that your will is properly executed.
Contacting an attorney early on in the process can also help you avoid potential problems.
What Is a Trust?
A trust is a legal arrangement in which one party, the trustee, holds property or assets for the benefit of another party, the beneficiary.
Trusts can be created during a person’s lifetime or after their death.
There are many different types of trusts, but they all have one common purpose. To provide financial security for the beneficiaries.
The terms of each trust are unique and can be customized to fit the grantor’s and beneficiaries’ needs.
Trusts can be used for many things, such as estate planning, asset protection, charitable giving, and tax planning.
The best type of trust for you depends on your specific goals and objectives.
If you’re considering creating trust, consulting with an experienced attorney is important. She/He can help you choose the right type of trust for your needs and draft the necessary documents.
Trusts are complex legal instruments, so it’s important to have professional guidance when creating one.
Key differences between wills and trusts
You should be aware of a few key differences between wills and trusts before making a decision.
For one, wills must go through probate court, while trusts do not. This can mean a longer wait for your beneficiaries to receive their inheritance and added costs.
Trusts also offer more flexibility regarding how and when your assets are distributed, whereas wills are more straightforward.
Another significant difference is that wills are public records, while trusts are not.
The benefits of public record are that it increases the transparency of the process and can deter potential challenges to the will.
The privacy afforded by trusts may appeal to some, but it also means more potential for abuse. Abuse can happen through trust because there is less oversight and accountability.
Lastly, trusts can be revocable or irrevocable, while wills are always revocable. This means that you can change your mind about trust, but not a will.
What does this all mean for you?
If you’re still not sure which route to take, consider speaking with an experienced estate planning attorney.
Doing so can help you weigh the pros and cons of each option and make the best decision for your unique circumstances.
In the meantime, here’s a more in-depth explanation of each option.
Will vs. Trust: Which Is Better?
There is no easy answer when choosing between a will and a trust.
The best way to make the decision is to sit down with an experienced estate planning attorney.
Doing this can help you understand the pros and cons of each option and choose the best option for your unique circumstances.
However, there are some general things to keep in mind when making your decision.
Just get a will: The main reason to get a will is that it’s simpler and less expensive than setting up a trust.
If you don’t have a lot of assets or a small estate, a will may be the way to go.
Another reason to choose a will is that it’s a public document.
This means that anyone can challenge it in court, but it also deters potential challenges because the challenger would have to go through the public process.
You should get a will because it provides peace of mind. Additionally, it can save your loved ones time, energy, and money.
A will is a clear legal instruction for where your assets should go when you die.
Having one helps you avoid the costly and time-consuming process of probate court.
Just get a trust: A trust can offer more protection for your assets than a will. A trust may be the way to go if you have a lot of assets or you’re worried about creditors, lawsuits, or estate taxes.
Creditors can take your assets after you pass on by going through probate court, but they can’t touch assets that are in a trust. Taxes are also less of an issue with trusts. This is because the assets in a trust are not subject to estate taxes when you die.
Another reason to choose a trust is that it’s private. This means that your beneficiaries can receive their inheritance without going through probate court, which can be a long and expensive.
You don’t want to be in a position where your family has to go through probate court, so a trust may be the best way to protect your loved ones.
Get both a will and a living trust: If you want the best of both worlds, you can get both a will and a trust. This way, you can have the simplicity of a will for your small estate and the protection of a trust for your large estate.
For example, you can use a will to leave your house and other assets to your family, and a trust to protect your money from creditors, lawsuits, and estate taxes. This can help ensure that your wealth goes to the people you love rather than being taken by the government or creditors.
You can also use a will to name a guardian for your minor children and a trustee for your trust, which can provide peace of mind for you and your family.
If you’re unsure which option is right, an experienced estate planning attorney can help you make the best decision for your unique circumstances.
No matter what you choose, the most important thing is that you make a decision and put something in place.
Remember that you can benefit from both if you don’t have a will or a trust.
The key takeaway is that you should consider how to create generational wealth. Begin by taking action to ensure your legacy continues!
Will vs. Trust – Conclusion
When it comes to estate planning, there are a lot of options to consider. One of the most important decisions you’ll have to make is whether to create a will or a trust.
Both options have their own set of pros and cons.
Remember it’s important to understand the difference between the two before deciding.
Having both can be the most effective strategy. However, it is still best to speak with a tax professional and lawyer to understand the benefits of having both.
Thinking about passing on may be difficult, but it’s important to have a for your loved ones.
It can give you a lot of peace! You will feel less anxious when the process is complete and comfortable with the future.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
