Are you looking for ways to ensure that your assets are distributed a certain way when you pass on? Do you find yourself confused between the options of creating a will or a trust? If so, then you need to learn all you can about wills vs trusts pros and cons.
Doing so can help you find the right one for your situation. You can plan your estate for after you pass and give yourself total peace of mind.
See below for an in-depth guide on the two options that you have, as well as the pros and cons of both.
Creating a Will
To put it simply, a will is a document that you create (with legal representation) that will lay out how you wish to have all of your assets distributed once you pass away. You’ll also appoint someone with the legal backing to see to it that those wishes are fulfilled.
Let’s dive into the advantages and disadvantages of creating a will for your situation.
Pro: Legal Supervision Required
Many people worry that creating a will or a trust is a moot point. They fear that, even though they’ve created a legal document listing their wishes for how their estate is dispersed, their wishes won’t be brought to fruition.
That’s why it’s important to make sure you create a will the right way. Wills must be written, signed, and witnessed to validate.
When you use a will court supervision is legally required to carry out the instructions that you spell out in your will. If you list it in your will, it will be done!
Con: Public Records
Many people don’t realize that wills actually aren’t a private item. They become public records as soon as they are carried out.
That means that anyone, even those cousins you want nothing to do with, can have access to the records and see how your assets were distributed.
For some, this isn’t a big deal. Once the wishes are carried out, they can’t be reversed, so the public records thing is more or less a level of comfort and privacy preference.
At their core, wills are very easy to create. Your legal representation can help guide you along in the process, giving you a legal will all the quicker.
Wills are also cheaper to create, although they do have to be probated so you’re paying for the cost of the court monitoring your asset distribution.
If you’re considering a trust, you might first consider the cost. For those of you that have fewer assets, the cost of trust might not be worth avoiding the probate process.
Con: Other Documents Might Be Necessary
Don’t expect the court to spell out your will for your loved ones during your preferred timeline. There are many times when the process behind a will can take much longer due to the probate process.
One of the most common misconceptions of wills is that you can list a caretaker when you’re unfit to take care or speak for yourself.
So if you’re looking for a medical power of attorney to made medical decisions on your behalf, you’ll need other documents to grant them that power. Be sure to read this article for several other common estate planning mistakes that people make.
Creating a Trust
Perhaps your preferred beneficiaries (such as your children) aren’t of an age that you feel comfortable leaving them with control of your estate.
If that’s the case, then a trust might be a better fit for your situation. A trust gives a third party (that you name) the ability to hold onto your assets for your intended beneficiaries.
You name all the rules: how to hold the assets, what to do with them, when they get passed on to your beneficiaries, etc. See below for a list of the pros and cons of creating trust.
Pro: Avoid Probate
As we mentioned before, the probate process can often be a time-consuming venture. It will push back the date on which your beneficiaries receive your assets.
If you were to create trust, you could skip that entire process. Your assets will go to the third party that you’ve listed quicker and enhance the security of your estate.
Every state has different probate processes. Creating trust allows you to avoid those lengthy processes and get your assets into the hands of people you trust all the quicker.
Con: Take Longer to Set Up
Of course, you’re able to avoid the probate process because of an elaborate set of planning when you initially set up the trust.
For some people, setting up a trust can be a lengthy endeavor. You’ll be required to retitle your possessions and assets in the name of the trust to ensure their security.
All of that takes a lot of time and money. For those with smaller estates, the cost of trust can greatly cut back the amount your beneficiaries receive.
Pro: Effective Immediately
Unlike a will, which waits on the court’s timeline to disperse your wishes, a trust becomes effective the moment that you pass away.
Your assets and all the details of your trust are handed out right away. This means that you can immediately list a guardian for your children to ensure they’re in safe hands.
It can give you more peace of mind. Your wishes and the finer details of your trust have all been prepared for that very moment.
Wills vs Trusts Pros Cons: Find the Right Fit for Your Situation
Now that you have seen an in-depth guide on wills vs trusts pros cons, it’s time to set up the proper agreement for your situation.
Still not sure which one you should pursue? Find legal representation that you trust and have them point you in the right direction.
Be sure to browse our website for more articles on planning your estate, as well as many other topics that you will enjoy.