Trust vs. Will: What is the Difference?

Trust vs. Will: What is the Difference?

Trust vs. Will: What is the difference? While both are used to protect and transfer assets, each provide a different set of benefits.

Regardless of which method you choose, it is important to have professional advisors (legal, investment, and tax).

To best decide which is right for you, let’s break down a trust vs. will.

Trusts

Trusts serve as a means to pass property and assets without the state involvement. While there are many types of trusts, the two most commonly used are; living and testamentary.

On its most surface level, a trust is created to transfer authority of finances to oversee the handling of assets upon your death. Trustees must follow the wishes as written by the trustor.

When done properly, trusts offer more control of assets. Including the ability of heirs to skip probate court. Probate court is the judicial system that oversees wills, trust, conservatorships, and guardianships. It is not uncommon for families to lose 2-4 percent of their inheritance on attorney fees and court costs.

Wills

Wills are documents used to assign the distribution of assets after your death. If you do not have a will upon death, the state will get involved and oversee the distribution of your assets.

Wills often include the following; guardianship of a minor, inheritance, disinheritance, and asset distribution. Unlike a trust, wills do not provide the ability to avoid probate court.

Which is Best for You

Essentially, trusts are great if you wish for your family to have a streamlined process to transfer assets upon your death. However, trusts do not provide the ability to assign guardianship. Wills do enable you to assign guardianship of minor children and protect assets.

As a general rule, everyone should have a will. Trusts can be more tedious and costly to setup, but they can also save your beneficiaries time and money.