Trusts And Wills: How They Differ
Although an estate plan can cover a wide variety of needs, two main parts of any good plan stand out. The last will and testament and a trust will cover a huge area of estate needs, and making each of these a part of your estate is vital. While some will and trust functions cross over each other, each one also provides several unique benefits. Read below for a comparison of wills and trusts for estate planning purposes.
Time Period Covered – A last will and testament covers what happens after death. However, a trust may also cover your needs should you become incapacitated and are unable to make decisions about your financial affairs when a medical or other problem pops up. When it comes to time, you should also consider that probate court can take a long time to complete the process and be final. A trust is effective immediately and ready to go with no need to file anything.
Probate Avoidance – A will won't help you avoid probate since it is the main part of the probate process. A trust, on the other hand, is perfect for avoiding probate since it takes precedence over the will and any provisions therein are exempt from probate. For example, if you leave your rare book collection to your nephew in a will, the nephew must wait until probate is concluded to take ownership of it. However, if you address that asset using a trust, they can have the asset as soon as the death certificate is issued after the death.
Privacy Concerns – One main issue with a last will and testament is that it's considered a public record. Probate notices are also published in the legal notices section of the newspaper. Anyone who is curious can read the entire will once it's been filed in the county probate court. Not so with a trust, which is entirely private and confidential. Even those mentioned in the trust won't know about the other beneficiaries of the trust. That lessens the potential for issues with those who don't inherit what they expected to inherit and then, consequently, hold things up when they file a contest in probate court.
Both wills and trusts are subject to the actions of creditors who have a claim against the estate. Also, almost all estates must be probated even if they don't contain many assets. Some small estates, though, can use a simplified process in probate court.
Using a trust to its fullest is highly recommended along with a simple will. Speak to a will attorney for advice on how to take advantage of all the ways you can make things easier for your survivors.