Did you know that 83% of Americans recognize the importance of estate planning yet only 31% have a will? A will is a legal document where someone called the testator writes down their wishes for what should happen after they die.
When you arrange your estate, you may need to choose between a will and a trust. Your choice between the two will affect not only the expense but also the process and your estate’s future. Estate planning has been on the decline since early this year across every class of income.
Wills & trusts lawyer R.J. Weber III says to plan your estate effectively, you need a wills and trusts attorney who is experienced with estate planning because without the proper estate planning, your family and loved ones could be left with contentious probate battles or tax burdens.
In this article, more information about trusts and wills will be given to inform you of their important role in planning for one’s estate.
Key Differences Between Will and Trust
What makes a will distinct from a trust in estate planning? A will is a document representing your expressed wishes concerning the disposition of property after your death. It only takes effect upon death and has to go through probate, an inherently lengthy and expensive process.
According to the Law Office of Cameron H. P. White, P.A., without a will, an estate administrator will be chosen according to statutory priorities, and the person designated may be the last person you want to take on the job.
You give your assets to a trustee to take care of for your beneficiaries when you create a trust. A trust can work right away and after death, so it doesn’t have to go through probate.
Since trusts are kept private during probate, they offer more privacy than wills. You can contest a will in court, but it’s hard to do so with trust.
Cost Comparison: Will vs Trust
Know the financial ramifications of wills versus trusts when comparing estate planning fees. Setting up a will is cheaper than a trust. The initial costs of wills are cheaper and depend on the complexity of your estate and the attorney’s fees. Upon your death, your assets and wealth will undergo lengthy and costly court proceedings.
Trusts cost a lot more, in comparison to wills, to set up and establish. Legal fees and other costs may be incurred when transferring assets into trusts. A trust allows contracting against the probate of your estate, saving time and money for your beneficiaries.
Process of Creating a Will
Reach out to an estate-planning attorney for your questions, or search online for information on how to begin making a will. Certain key steps need to be followed for a successful will creation. Gather all relevant information about assets, debts, recipients, and the method you want to divide your estate.
You must select the person who will execute your will. The will is then drafted by your attorney or by yourself using a reputable online template.
There should be witnesses during the signing of your will. Regularly check your will to see if some changes need to be made. Major life events like marriage, divorce, and childbirth will necessitate some modifications in your will to keep it updated.
Establishing a Trust: Step-by-Step
Make a will, then establish a trust. Select a trust type that matches your needs to create it. Revocable, irrevocable, and living trusts are some of the common choices made by people. Choose a trustee to operate your trust according to your instructions. Depending on the type of trust you choose, you can become your own trustee or just select a trustworthy person or institution to carry out the terms of the trust.
After designating a trustee, create a trust document with terms and conditions. The drafted document will govern asset management and distribution.
After preparing the trust document, transfer assets into the trust’s name to support it. This stage may require retitling bank accounts, investments, or property deeds.
Utilizing Wills and Trusts: Practical Uses
Look at the many ways wills and trusts can safeguard and transfer your assets.
A will helps you share your assets after death. Hiring a good lawyer can set the goals of your estate planning to match with your personal preferences. Young kids can be assigned their guardian through the power of the will. The will can also facilitate the scheduling of a funeral and set up trusts for the heirs.
Trusts govern asset distribution during and after life. Trusts make probate easier, cut estate taxes, protect privacy, and keep you from having to go through probate. It can also set rules on beneficiaries, such as age, tuition, or certain life events.