The Differences for Your Decision
When putting your estate plan together, you may need to decide whether you want to include a will or trust. Understanding the differences between a will and a trust can assist you in deciding which vehicle is best for you. Here is what you need to know with respect to the differences between wills and trusts.
The Similarities Between Wills and Trusts
Generally, the primary similarity between wills and trusts is that both allow you to leave assets to designated beneficiaries after your death. Additionally, both wills and trusts enable you to name a person to manage your assets after you pass.
The Various Differences
While they share similarities, wills and trusts do have several fundamental differences that can change how your assets are distributed. These differences include, but are not limited to, the following:
- A will must go through probate court, which can ultimately be a lengthy and costly process. A trust, however, does not have to go through the probate process, ultimately saving its beneficiaries time and money.
- When property is listed in a trust, that property can be considered separate from you. In order to maintain control over that property, you must list yourself as the trustee; doing so allows you (or whoever is named the trustee) to maintain control over any assets named in the trust.
- Assets passed down in a will may face the estate tax, as well as the federal gift tax, which may ultimately diminish the value of what a beneficiary walks away with. Assets distributed in a trust may not face the estate tax but may still be liable to the gift tax. Trusts may be used to minimize or avoid estate and gift taxes.
- A will is made public record and, therefore, can be searched by anyone who is interested in doing so. A trust allows the individual who creates it and those individuals named within it to maintain a level of privacy, as the trust is not made public.
- A trust may allow the grantor to control assets to provide financial protection for beneficiaries after you have passed. For example, a trustee can manage funds for a beneficiary under a certain age, or has poor spending habits, or who is incapacitated.
Based on these differences, it is more common to see larger estates have a trust, and smaller estates more commonly have wills attached to them. However, this is not a rule people must follow. Trusts are also commonly used in non-traditional family structures, in order to best protect the children.
Working with an Attorney
If you have questions about wills, trusts, or other estate planning matters, it’s important to get those questions answered by an attorney who understands estate planning law and can help you put together a plan that protects your best interests. At Laubacher & Co., we know how important it is to protect your family, which is why we will work with you to craft an estate plan that meets your unique needs.
To learn more about estate planning or to schedule a consultation, call us at (440) 336-8687 or visit us online.