The Importance of Creating One and Key Differences Between Wills and Trusts

By: Allyson Stewart

Thinking about the end of one’s life can be intimidating, uncomfortable, and also confusing. But by creating an estate plan that suits your wants and needs, your family and friends will know exactly what you desired and intended. There is also a peace of mind that comes from knowing your loved ones are aware of your final wishes, and that they do not have to guess or assume what you would have wanted.

But how do you know what route to take? This all depends on your goals, and estate planning is not one-size-fits all. Two of the main avenues in estate planning are creating a will-based plan or creating a trust-based plan. Both of these options can ensure your assets pass according to your wishes upon your death, but they accomplish different things.

First, a will is a document that identifies your loved ones, determines assets, and sets out to whom you want your possessions distributed. A will can be simple or it can be more detailed. Either way, it is important to also name someone you trust that will be in charge of carrying out the final wishes you have expressed in your will. One thing to keep in mind with a will is that a will must go through the probate process upon your death before it takes effect. Whether a probate is required will depend on the assets you own at the time of your passing, and how they are titled. If you have a will-based estate plan, any property that you leave in your name individually will need to go through the probate process before it can be distributed. This often includes things like real property, but it does not include assets with payable on death beneficiaries designated.

Next, a trust is a document that creates a separate legal entity to hold and manage the assets of the person who creates the trust. The primary benefit to a trust-based estate plan is that it avoids the need for a probate, assuming all assets are titled in the name of the trust. Trusts also allow for more selective distribution of said assets, and more comprehensive planning than wills allow.  A trust requires assets to be properly placed into the trust in order to avoid probate.

Another thing to consider when deciding between a will-based or trust-based estate plan is the cost of creating an estate plan. A will-based plan can be cheaper and simpler to create initially, but will most likely require a probate which would cost time and money for your loved ones after you pass. On the other hand, a trust-based plan will cost more and take more time to create than a will-based plan, but it will most likely avoid the need for a probate, which substantially streamlines the process and minimizes expenses for your family after your passing. It is important to be able to identify what assets you own and discuss with an attorney what the best way is to achieve the goals you have.

Life changes and as we get older, our assets typically change. It is important to review and update your estate plan throughout different seasons of life. Maybe a will-based plan was sufficient when you were younger, but now you have a bigger family, more assets, or different ways you want those assets to be distributed, and a trust would better suit your needs now. Make sure you create a plan that best suits your needs where you are. An attorney can help ensure that your final wishes are memorialized in the way that you want and hopefully, offer a peace of mind for you. Contact Bass Law today to schedule a consultation with one of our estate planning attorneys.