You may be asking yourself, should I use a trust-based or will-based estate plan? Estate plans are often developed around one document. Of course, a “will-based” plan builds around a Will and requires probate at your death. And the “trust-based” plan is a plan based on a trust and avoids probate at your death. That doesn’t sound too difficult. However, as you prepare to work on your estate planning, it’s important to know and understand the differences between the two plans.
Wills vs. Trusts
A testator signs a Wills so that people know how to dispose of their property after they pass away. Wills often state who will serve as executor or personal representatives. Special gifts called bequests will be made. When a testator has children, the Will states who will care for the children if the testator passes away.
Trusts also involve disposing of property. When the trustor signs the trust document, he or she creates the trust and names the beneficiaries. Then, the trustor funds the trust by transferring assets to it. Sometimes people will use a living trust and a pour-over Will. Assets not transferred to the trust prior to the testator’s death are transferred by the pour-over Will. This is called a trust-based plan even though both a trust and a Will are used.
Which is Better – the Will or the Trust?
That depends on your goals and what concerns you the most:
- Would you and your family like a little privacy? Wills become public record upon being filed for probate. Any member of the public can view court records, read your Will, and know your personal business. Trusts, however, do not become part of public record. So, your neighbor can run to the courthouse to see a copy of your Will, but not your trust.
- Is it important to have a speedy, cost-effective distribution of estate assets? The property in a Will-based plan has to pass through probate before being distributed. However, most of the time trust-based plans transfer estate assets to beneficiaries more quickly. The assets don’t pass through the court system first.
- Is asset protection a consideration? Wills distribute assets, but do not protect them. Some Trusts can provide asset protection depending on the type of trust chosen.
- Do you want to pay costs up front or long-term? Trusts generally cost more to put together than Wills. However, trust assets typically avoid probate, as well as the associated court costs and legal fees that will be incurred when you pass away.
- Do you have concerns about your family fighting when you pass away? If so, a trust may be a better option. Since a Will requires probate, it is a court proceeding. A court proceeding means that all heirs are entitled to notice and can contest the terms of the will. A trust does not go through probate. Therefore, there is no court proceeding and it is less likely that your children/family will have anything to fight about.
Talk to Us About Your Estate Plans.
Facing incapacity is the first step. Take the next step by talking to a qualified Alabama Estate Planning attorney. The lawyers and staff at Miller Estate and Elder Law, help clients deal with both emergencies and advanced planning. Schedule an appointment by calling 256-251-2137. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.