Differences Between a Will and a Trust
If you are thinking about creating an estate plan, you have probably come across such terms as “will” and “trust.” However, you may not understand the difference between a will and trust. You need to know which one is best for you in order to protect your assets and your family.
For most people, deciding between a will and a trust may feel overwhelming. If you need assistance creating a comprehensive estate plan, reach out to legal counsel. As an estate planning attorney representing clients throughout Idaho and California, I help individuals and families move beyond just drafting a simple will. I make sure they understand the benefits of setting up a trust to ensure that their estate plan accurately reflects their goals, wishes, and needs.
At Moses Estate Planning, PLLC, I focus on providing legal counsel to individuals and their families in Coeur d’Alene, Idaho, and throughout Kootenai County. I also serve clients in Los Angeles, California.
Why You Need an Estate Plan
Contrary to popular belief, everyone can benefit from establishing an estate plan—not just the wealthy and elderly. Even if you are young and have not accumulated substantial wealth, you might want to consider creating an estate plan for several reasons. Some of the benefits of having an estate plan include:
You can avoid probate or minimize its costs. Depending on the tools used in your estate plan, the size of your estate, and the skills of your attorney, you may be able to avoid the costly and time-consuming probate process. If probate cannot be avoided, a well-crafted estate plan could help you minimize its costs.
You can protect your loved ones. One of the things you can achieve with a will—and especially a trust—is protecting your loved ones. A comprehensive estate plan will ensure that your assets go to the intended heirs, specify who should care for your children, and prepare documents for the protection of your loved ones in the event of your incapacity or death.
You can prepare for sudden and unexpected incapacities. If your health deteriorates suddenly or you get hurt in an unexpected accident, you will put a heavy burden on your family if you do not have an estate plan that outlines who should make decisions on your behalf.
You can communicate your wishes and needs. Without an estate plan, your loved ones may not truly know your goals or final wishes. You can communicate your final wishes and ensure that your loved ones understand your objectives and needs through a well-crafted estate plan.
You can avoid family disagreements. It is not uncommon for family members to disagree regarding the distribution of a loved one’s assets, especially when the loved one does not have an estate plan that specifies their wishes.
Many people who consider creating an estate plan wonder, “Should I have a will or a trust?” While wills are popular estate planning tools, it’s important to understand the tremendous advantages of trusts.
What Is a Will (Last Will & Testament)?
When most people hear the words “estate planning,” a will is usually the first thing that comes to their minds. While a will—or a last will and testament—is a major element in a comprehensive estate plan, it is not the only legal document your plan can contain.
A will is a legal document that accomplishes several estate planning goals, including but not limited to the distribution of your assets and the appointment of the executor of your estate (also known as a personal representative). It is vital to work closely with a skilled estate planning attorney to help you create a valid and legally-binding will.
If you die without a will, which is also known as “dying intestate,” your assets and property will be distributed to your heirs according to your state’s intestacy laws. However, keep in mind that wills go through the probate process. Among other downsides, the probate process is a public process that leaves you, your family, and your assets open to public scrutiny.
When you need to draft a will, contact a knowledgeable attorney to assist you with creating a will tailored to your specific goals.
What Is a Trust?
If your goal is to create a comprehensive and effective estate plan, you’ll need to set up a trust or several trusts. A trust is a fiduciary agreement between a trustor and a trustee that can be used to hold assets for the trustor’s beneficiaries.
There are many types of trusts you can choose from. Contact legal counsel to choose the trust you need for your specific situation. Some of the most common types of trusts are:
Living trusts
Revocable trusts
Irrevocable trusts
Testamentary trusts
Joint trusts
Charitable trusts
There are many reasons people choose to set up a trust as part of their estate plan. Some of the benefits of creating a trust include:
Trusts bypass the lengthy and often expensive process of probate.
Assets can be kept in a trust until a future date (i.e. a beneficiary reaches a certain age).
Trusts provide ample protection in case of mental incapacitation.
Trusts provide anonymity and don’t become public record, unlike a will.
Trusts allow you to take advantage of tax benefits.
How an Estate Planning Attorney Can Help
Wills are certainly one element of an estate plan—but trusts allow you and your family a greater sense of privacy and peace of mind. At Moses Estate Planning, PLLC, I offer case evaluations to clients throughout Idaho, including Coeur d’Alene. I also help individuals and their loved ones in Los Angeles set up trusts and plan their estates effectively.