Wills and trusts are the two pillars of estate planning. Both are legal instruments that serve the purpose of ensuring your assets and wishes are protected when you pass away, and yet each works differently. Here, we break this difference down, talk about the steps involved in drafting a will or executing a trust, and discuss why you might want to do one or the other.
Wills vs. Trusts: What Sets Them Apart
Wills and trusts serve similar purposes, but they’re not the same.
- Probate: Wills need to go through the probate process, which can be time-consuming and costly. Trusts, on the other hand, often bypass probate, allowing for a more efficient distribution of assets.
- Privacy: Wills are public documents, meaning anyone can access the information in them. Trusts, however, are private and provide greater confidentiality.
- Flexibility: Trusts offer more flexibility in terms of managing and distributing assets, especially if you want to control how and when beneficiaries receive their inheritances.
- Complexity: Trusts can be more complex to set up and manage compared to wills, which are generally simpler.
The Steps Involved in Drafting a Will
For being one of the most important tasks you’ll ever undertake, drafting a will is a relatively simple, if not delicate, process.
- Inventory Your Assets: Begin by listing all your assets, including real estate, bank accounts, investments, personal and digital belongings, and more.
- Appoint an Executor: Designate a trusted individual as the executor of your will. This person will be responsible for managing the distribution of your assets and ensuring your wishes are carried out.
- Name Beneficiaries: Specify who should inherit your assets and how much each beneficiary should receive. The more detail you provide, the less likely disputes will occur.
- Choose Guardians: If you have minor children or dependents, decide who will be their legal guardian in the event of your passing.
- Regular Updates: Keep your will up to date as your circumstances change, such as marriages, divorces, births, or significant financial changes.
The Steps Involved in Executing a Trust
Much like a will, executing a trust is easy with the guidance of an experienced trust lawyer.
- Identify Assets: Compile a list of everything you own.
- Choose a Trustee: Select a trustee, whether a person or institution, responsible for administering your trust assets according to the terms set in your trust agreement.
- Draft the Trust Agreement: Work with an experienced trust attorney to create an agreement outlining terms, beneficiaries, and distribution instructions.
- Fund the Trust: Transfer assets into the trust by updating ownership titles.
- Regular Review: Periodically review and update the trust to reflect changing circumstances.
Why Choose a Trust Over a Will
While both wills and trusts have their place, the latter offers distinct advantages:
- Asset Protection: Trusts can be structured to protect assets from creditors or legal disputes.
- Avoiding Probate: Trusts enable assets to pass directly to beneficiaries without the delays and costs of probate.
- Privacy: Unlike wills, trusts offer more privacy as they are not subject to public scrutiny.
- Control: Trusts allow you to establish specific conditions for asset distribution, such as age or certain milestones that beneficiaries must meet.
Wills and trust a both powerful tools, and every single adult needs one or the other (and sometimes both). Which you choose depends on your individual circumstances and is a question only a qualified estate planning attorney can answer, however.
Want to learn more? Reach out today! The Estate Planning Law Group of Georgia isn’t just a law firm specialized in estate planning, we’re a passionate and experienced team dedicated to providing an educational approach that ensures you don’t just get a perfect plan, but you get the understanding needed to keep your plan updated and working in your best interest.