Wills vs. Trusts: Which One is Right for You?
Sept. 27, 2022
Most people are familiar with the estate planning mechanism known as the last will and testament, or simply will for short, but they may not be aware of another legal tool that can accomplish the same goals of caring for your loved ones when you’re gone. This legal document is known as a living trust.
What’s the difference between a will and a living trust, and which one is the better option for you?
If you’re in the Pittsburgh, Pennsylvania, area and looking to start the estate planning process, contact the Law Offices of Kelton M. Burgess, LLC. We will meet with you, discuss your family and financial situation, and advise you of the best plan going forward to fit your unique needs and challenges, as well as those of your loved ones.
If you already have a will or other estate planning in place, let’s meet to review what you have. Estate planning needs to be periodically reassessed to determine if it still meets all the needs and challenges of the future.
What Is a Will?
A last will and testament, or will, is the basic building block of estate planning. A will designates who gets which of your assets when you’re gone. It also names a personal representative who will oversee the process of distributing your assets.
A will, to be administered, must be accepted and overseen by a probate court, which will name the personal representative as the executor of your estate. The executor, under the supervision of the court, will then do the heavy lifting – that is, pay off existing debts and taxes; manage your assets during the probate proceedings; sell assets as necessary; and finally, distribute everything to your beneficiaries – all under the supervision of the court.
Probate is a public process, and it leaves a public record. In a smooth probate proceeding, everything should be wrapped up in less than a year, but complications can arise. During the proceedings, disgruntled heirs can challenge the validity of the will, dragging out the proceedings and running up costs. Creditors can also appear out of nowhere demanding payment for which you have no record of debt.
What Is a Living Trust?
A living trust is one that is set up while you’re alive, as opposed to a testamentary trust that can be established after your death through instructions in your will.
A trust is a legal entity into which you pour all your assets. While alive, you are the trustee, so you manage everything you own just as you would if you had set up a will. Instead of a personal representative, however, you name a successor trustee.
The successor trustee has two roles – taking over managing your estate should you become incapacitated and taking over management and subsequent distribution to beneficiaries once you are gone.
The key here is that a trust does not need to go through probate. The distribution of assets can thus take place almost immediately. In addition, administering a trust is a private affair, and no public meetings are held or public records are created.
Which Is Better for You?
The main consideration in choosing between a will and a trust is that there is no probate court supervision in the administration of a trust. Probate proceedings can be both time-consuming and costly. Loved ones may have to wait months or more just to receive what you’ve designated for them.
However, even with a trust, you could still need a will. Only in a will can you name a guardian for any minor children you have. You can also use a will, but not a trust, to designate how you want your debts paid. For instance, “Sell my classic Corvette to pay my outstanding credit card and installment loan debts.”
A will can also be used to designate your funeral and burial choices. Finally, even if you have a trust, some assets may slip by and not be added to the trust during your lifetime. A will can be used to “pour over” those assets into your trust, but the process will still have to go through probate.
Unlike a trust, a will has no power until you die. Should you become incapacitated, the will has no provision to name someone to manage your affairs in your name.
When all is said and done, a will – outside of the time involved for probate – may be a good enough choice if your assets are minor. After all, many assets pass outside of probate anyway and cannot be included in either a will or a trust.
For instance, a retirement account or life insurance policy with a named beneficiary, or a home owned jointly with another person, will pass immediately to the beneficiary or co-tenant, no probate needed. Also, if your assets outside of real estate total less than $50,000, you may be able to avoid probate altogether.
Finally, if privacy is important to you, then you’ll want to avoid probate with its public nature and a public legal record created, by creating a living trust.
Rely on Trusted Legal Advice
Planning for the future for yourself and your loved ones is an important step and one that should be given careful consideration by weighing all the issues and options involved. Will vs. trust, or a combination of the two, is certainly the logical starting point.
If you’re in the Greater Pittsburgh Area of Pennsylvania, contact the Law Offices of Kelton M. Burgess, LLC for a compassionate and confidential analysis of your estate planning needs and objectives.
We provide personalized service and never try to fit anyone into a cookie-cutter solution. Your needs and wishes are unique, and we are here to honor that. Reach out today.