Will vs. Trust: A Comprehensive Guide, Key Differences, Benefits, and Which is Right for You

There are many estate planning options, and deciding on the right path might feel overwhelming. However, below, we shall elaborate more on what a Will and a Trust are, give a comprehensive guide on how to create both, and state the key differences and benefits between the two, which will assist you in deciding which one is best for you.

What is a Will

A Will is a legal document that describes how you would wish for your property and other assets to be distributed after your death and who should take care of your minor children, if any.

Do Wills Require Probate?

Yes, your Will requires probate. After your death, it goes through probate to ensure that every aspect is followed according to your instructions and wishes and to further ensure its validity.

When do Wills go into Effect?

Will go into effect until you die. The Will contains your wishes on what happens to your assets after your death. Before your death, you keep all your rights, and your beneficiaries will only inherit the assets after you pass away.

What are the Pros and Cons of a Will

There are pros and cons of having a will, and below is a list of some of them for your better understanding; –

Pros of having a Will.

1. You get to distribute your assets how you want
2. You can choose a guardian for your minor children
3. You can appoint an executor to manage your assets according to your will
4. You can include your funeral preferences

Cons of having a Will.

1. They can be challenged.
2. They do not have any tax benefits.
3. They are not private; once they go through probate, they are deemed a public record.

What is a Trust

A Trust is a fiduciary legal arrangement that allows a third party, known as a trustee, to control, hold, and manage assets on behalf of beneficiaries.

Is a Living Trust Better than a Will?

Yes, a living trust is better than a Will in some areas because while the Will needs to go through probate for your beneficiaries to inherit your property, a living trust allows you to bypass probate court and distribute your assets exactly how you wish. Further, a Will only occurs upon your death, while a living trust is effective until a predetermined time.

When do Trusts go into Effect?

Trust goes into effect immediately after they are registered. This is because the grantor spells out how the assets can be used during his lifetime and managed by a trustee and how those assets should pass to the beneficiaries after death or a certain predetermined time.

Can you Set Up a Trust without an Attorney

Yes, you can set up a Trust without an Attorney. However, it is important to get the assistance of an attorney in complex estates and to get any clarifications on the laws to be followed.

What are the Pros and Cons of a Trust

The pros of a having a Trust are:

1. You avoid probate, hence simplifying and speeding up the distribution of your assets
2. Minimising conflict as trust instructions cannot be contested in court
3. Maintain privacy as your assets do not become public records because of lack of probate
4. Minimise taxes

The Cons of having a Trust are:

1. Complex structure
2. The trust can be expensive to establish and maintain
3. The trust deed limits the power of the trustee.

What are the Disadvantages of Putting Your House in Trust?

Putting your House in a Trust has its advantages that come with some of the following disadvantages; –

1. Creating and maintaining Trust is more expensive.
2. Putting your house in Trust does not protect other assets outside the trust from probate.

What are the Differences Between Trust and Will

Trusts and Wills are essential tools for estate planning for anyone. However, they serve a different purpose and have distinct characteristics, as stated below; –

What are the Benefits of a Will and Trust

A Will and a Trust both have their unique benefits for estate planning, as elaborated below; –

A Will

1. It is simple, straightforward, and easy to create, making it accessible for most individuals.
2. It provides clear instructions as to the specifics of asset distribution to ensure your instructions are honoured.
3. You can appoint an executor to manage your estate, ensuring that someone you trust handles it.
4. It allows you to appoint guardians for any minor children in the event of your death.
5. It can be updated or revoked easily as your circumstances change.

A Trust

1. It avoids the probate process, allowing for a quicker and more private distribution of assets.
2. They do not form part of the public records as they avoid probate, and your matters are confidential.
3. They can continue to operate after your death.
4. Certain types of assets can offer tax advantages and help reduce estate taxes.

What are the Negatives to a Trust vs Will?

As much as both a Trust and a Will have their advantages, there are some drawbacks and below are some of the negatives to both a Trust and a Will; –

A Trust

1. Establishing a Trust can be more complicated as the legal requirements and paperwork can be overwhelming.
2. Setting up a Trust involves higher costs and attorney fees.
3. Trust ensures there is an ongoing management and oversight.

A Will

1. They must go through probate.
2. Once they are probated, they become a public record.
3. They take effect upon death.

How to Decide if You Need a Will, a Trust, or Both

Deciding on whether you need a Will, a Trust, or both involves considering several factors about your circumstances and your estate planning goals and below are how you can decide which one to pick; –

1. Size of your estate – In the event you have a large or complex estate, a trust will be considered more than a Will.
2. Consider your family situation – In the event you have minor children, a Will can specify guardianship.
3. Evaluate privacy concerns –  Considering your desire for privacy, a trust might be a better option since it remains confidential and avoids probate.
4. Think about control and flexibility. A trust can offer more flexibility than a will in setting more specific conditions on how and when beneficiaries receive their assets.
5. Consider the Costs and Complexity – in a simple, straightforward estate, a Will might suffice.

Can you Have Both a Will and a Living Trust?

Yes, you can have both a Will and a Living Trust and most individuals may choose to do both as part of a comprehensive estate plan. Using both a Living Trust and a Will can provide a flexible estate plan that addresses various aspects of your financial and family needs.

Does a Will Override a Trust?

No, a Will does not override a Trust as they work together and serve different purposes in an estate plan.

A trust typically takes precedence over a will for the assets that have been transferred into a trust. It is crucial to maintain clarity and consistency between the two documents.

Who Needs a Trust Instead of a Will?

High-net-worth individuals, real estate owners, and parents of minor children are some of the individuals who need a Trust instead of a Will. A Trust will be more beneficial than a Will as it offers many benefits that may not be necessary for everyone.

At what Net Worth do I Need a Trust?

There is no specific net worth that will dictate when you should establish a trust, as the decision depends on various factors other than financial worth. 

While there is no strict net worth requirement, many individuals with assets of $1 million or more and specific family or financial situations will find trusts beneficial.

What is Better, a Will or a Trust?

Deciding on whether a Will or a Trust is better depends on the specific circumstances, goals and preferences such as simplicity, privacy, asset management, estate size and family dynamics. Consulting with an attorney can help determine the most effective approach based on your situation.

Why Trust is Better than a Will?

A Trust can be considered better than a Will in several vital areas depending on your estate planning needs. Some of the reasons to prefer a Trust are; –

1. They avoid Probate
2. They provide Privacy
3. Allows ongoing management of assets
4. It includes estate tax benefits
5. It provides control over asset distribution

What to Consider when Making a Will

When creating a will, there are several factors to consider when making a Will to ensure that your wishes are clearly expressed and legally enforceable. The factors to be considered in how to create a Will are –

1. Identify who your beneficiaries are
2. List your assets clearly, including property and personal belongings
3. You appoint a guardian for the minor children
4. You appoint an executor
5. Review and update your will periodically after significant life events
6. Consult a professional.

What to Consider When Making a Living Trust

When creating a living trust, several important factors must be considered to ensure that it effectively meets your needs and goals. Here’s a comprehensive guide:

1. Purpose of the Trust – this is to determine whether the trust is primarily for managing assets during your lifetime or for distribution after your death.
2. Types of Trusts – you can decide in the type of trust depending on between a revocable trust that allows you to change or revoke the trust during your lifetime or an Irrevocable Trust that generally cannot be changed after creation. 
3. Assets to Include – Identify which assets you want to transfer into the trust, such as real estate and personal property.
4. Choosing a Trustee – you should select a reliable person or institution to manage the trust. 
5. Identify Beneficiaries – you should clearly specify who will benefit from the trust and how and when beneficiaries will receive their inheritance.
6. Cost and Complexity – Consider the costs associated with setting up and maintaining the trust, including attorney fees and possible trustee fees.

How Much Does a Living Trust Cost?

A living trust costs $450 on LegalPen. The cost of creating a living trust can vary widely based on several factors, including complexity, location, and whether you use a professional. Consulting with an estate planning attorney can help you understand the total costs involved and ensure your trust is properly set up.

How much Does a Trust Cost to Maintain

It can cost an average of $1,000 depending on the Trustee Fees, Legal Fees, Account Management and Administrative Costs, the type of trust, the assets involved. 

Maintaining a trust can cost anywhere from a few hundred to several thousand dollars annually, depending on your specific situation and the complexity of the trust. It’s essential to budget for these costs and consult with professionals to understand the ongoing requirements of your trust.

What is the Advantage of Putting Everything in a Trust?

Putting your assets in a trust offers several significant advantages, which can help streamline estate planning and provide various benefits for you and your beneficiaries. Below are some of the advantages of putting everything in a Trust; –

1. Avoids Probate – Assets held in a trust bypass the probate process, allowing for quicker distribution to beneficiaries.
2. Privacy – Unlike wills, which become public records during probate, trusts remain private, keeping your financial affairs confidential.
3. Control Over Asset Distribution – You can set specific terms for how and when beneficiaries receive their assets, such as age milestones or certain achievements.
4. Protection for Vulnerable Beneficiaries – in the event you have beneficiaries with special needs, a trust can provide for them without jeopardizing their eligibility for government benefits.
5. Reduced Family Conflict – A trust can help reduce misunderstandings and disputes among family members by providing clear instructions on asset distribution.

Where to get a Will and Trust Lawyer

You can hire a Will and Trust Lawyer at LegalPen where you will find legal professionals experienced in creating Wills and trusts with top-notch skills who are ready to advise and assist in any way you may require and go further to areas and information you may not be aware of. 

Are Wills or Trusts needed if Beneficiaries are Deignated on an Account?

No, Wills or Trusts are not needed if a beneficiary is designated on an Account. This will ensure that they can avoid probate, overriding any estate planning that may be in place.

What are the Costs for Will vs Trust

On average, a Will can Cost around $150, depending on the type of Will and the Complexity of the Estate, while a Trust may cost approximately $450, depending on its simplicity or complexity.

What are the 5 Advantages of a Trust over a Will

There are different situations in which a Will or a Trust can be applied. The following are the five advantages of a Trust over a Will; –

1. A Trust can be used to avoid probate while a Will can not.
2. A Trust can reduce Estate Taxes, while a Will can not.
3. A Trust can administer Assets to minor beneficiaries without any Court intervention, while a Will can not.
4. A Trust may help protect your heirs from creditors.
5. A Trust provides you with a comprehensive document that is easily amendable.