Many ask themselves what is the difference between a will and trust when they are thinking about estate planning. What are the benefits and drawbacks of each planning instrument and which is right for you? I have put together a quick guide so that you can determine which you will use in your estate plan.
What are the benefits of a will?
Name Guardians for minors: You can only name a guardian for minor children in a will. This is so that the court can still oversee the process of placing a minor with a new legal guardian.
Naming a personal representative: You can only name, what historically was called an executor, a personal representative, in a will. A personal representative is the person who represents you in court should your estate need to go to court.
What are the benefits of a Trust?
Avoid Court when you pass: A trust can completely avoid the necessity of going to court at all depending on two things: how well-crafted the trust is and whether there are minors to care for. A well-crafted trust can avoid arguments that often arise in court too.
Avoid Court when you are alive: A trust can also avoid the necessity of court if you become mentally incapacitated to the point where you can no longer take care of your own finances. Typically, if this happens and you have not done any planing or have only created a will, your financial future will depend on what a judge thinks. This judge can put a stranger in charge of your spending. This is a fate that most want to avoid.
Privacy: The court process is public. If you create a well made trust, you can avoid the public nature of a court process.
How can I get all of these benefits?
Typically, I advise that clients create both a trust and a will. The will is typically plan B. This is the document that will be followed if not everything is transferred into the trust. The trust avoids court and all of the headache that process brings.
If you have questions about creating your own estate plan, call us at (951)304-3431.