Trusts are only for rich people, right? Nothing could be further from the truth because trusts are often an excellent choice for many Americans with average wealth. So, what is the difference between a will and a trust and which one is right for you?
What is a Will?
A will is a legal document that indicates how you want your assets to be apportioned when you die. You can revoke or change your will at any time. You can also name a guardian for your minor children in your will.
There are some disadvantages to wills. First, wills are of no use in the event that you become incapacitated, because a will springs into existence only when you die. So if you have a will and become incapacitated, your relatives will have to go to court to have a guardian and/or conservator appointed. Second, if you die with a will in place, your will must go through a process known as probate. This is a court process that is entirely public, expensive and can be lengthy. Anyone can go down to the courthouse to take a look at how many assets you had at your death and how much debt you had.
What is a Trust?
A trust is a legal document that designates a person to manage your property. There are many different kinds of trusts, but one of the most popular is a revocable living trust. A revocable living trust can be revoked or changed by you at any time before you die (as long as you are mentally competent), and it holds title to your assets during your life. Upon your death or incapacity, the revocable living trust makes it easy to transfer title of your assets to person(s) named in your trust. Trusts can also be structured to lessen the impact of estate taxes.
One disadvantage of a trust is that you have a bit more work to do setting up the trust and moving your assets into it. However, once you do, the heavy lifting is done and when you die, your family will greatly benefit by easy transfer of title and avoiding the lengthy and expensive probate process. Further, with a trust, the process is entirely private.
Our knowledgeable wills and trusts attorneys can help you decide whether a will or a trust is right for you. Contact us today.