Wills vs. Trust

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What is the Difference Between a Will and a Trust?

A will and a trust are both estate-planning tools, but they differ in key aspects:

  1. Functionality:
    • A will is a document that outlines your wishes about your estate after your death. It names a personal representative to manage your estate and can include instructions for how to distribute assets and care for minors.
    • A trust, on the other hand, allows you to put assets into a trust for the benefit of others, managed by a trustee. Unlike wills, trusts can be used to distribute property before death, at death, or afterward.
  2. Probate Process:
    • Wills must go through probate, the court-supervised process of authenticating the will and distributing assets. This can be time-consuming and public.
    • Trusts typically bypass the probate process, allowing for a quicker, more private distribution of assets.
  3. Control Over Assets:
    • Wills provide instructions for assets only after death.
    • Trusts offer more control, allowing you to set terms for how and when assets are distributed, which can be before, at, or after death.
  4. Privacy:
    • Wills are public documents once they enter probate.
    • Trusts are private, keeping your affairs confidential.
Trust Vs Will

Living Trust Vs. Will

A Living Trust is a specific type of trust that:

  • Takes effect during your lifetime.
  • Allows you to control assets in the trust and amend or revoke the trust as long as you’re competent.
  • Provides for management of your assets should you become incapacitated, without requiring a court-appointed guardian.

In contrast, a will:

  • Only becomes effective after your death.
  • Does not provide for the management of your assets if you become incapacitated.

Examples

  1. Will: John creates a will to leave his home to his daughter after his death. The will goes through probate upon his death.
  2. Living Trust: Mary places her investment portfolio in a living trust, with instructions to distribute dividends to her son while she’s alive and transfer the portfolio to him upon her death. This bypasses probate.

Conclusion

Understanding the differences between wills and trusts is crucial for effective estate planning. Wills are simpler and suitable for straightforward estate plans, while trusts offer more control and privacy but are more complex. Consider your individual circumstances and estate goals when choosing between them. Contact us today for a free quote.

Wills Vs. Trust

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Frequently Asked Questions

Why is trust better than a will?

A trust avoids probate, provides privacy, allows for asset management during life, and can provide tax benefits.

What are the pros and cons of a will versus a trust?

Wills are simple, inexpensive, and easy to change but require probate and are public. Trusts are more complex and cost more, but they avoid probate and provide privacy and asset management.

What are the disadvantages of putting your house in a trust?

Putting a house in a trust can be complex and costly and may result in losing control.

What is one disadvantage of a will over a trust?

A Will requires probate, which can be costly and time-consuming.

What are the disadvantages of a living trust?

Living trusts can be complex and costly, resulting in losing control over assets.

What is the primary purpose of the trust?

Protection of assets.

What are the four types of trust?

Revocable, Irrevocable, Testamentary, and Inter Vivos.

What comes first, will or trust?

Typically, a will is executed before creating a trust.

Why use a trust instead of an LLC?

Trusts offer more excellent asset protection, estate and tax planning flexibility, and greater privacy than LLCs.

What is the difference between will and trust?

A “Will” is a legal document outlining how a person’s assets will be distributed after death. “Trust” is a legal arrangement where a person (the grantor) gives control of assets to another person (the trustee) for the benefit of a third party (the beneficiary).

How does the beneficiary get money out of trust?

The beneficiary receives money from the trust through distributions made by the trustee based on the terms outlined in the trust agreement.

What assets should not be in a trust?

Assets with no clear title, liabilities, or items challenging to value should not be put in a trust.

What are the pros and cons of wills and trusts?

Wills are easier to create, less expensive, and more flexible, but they need to go through probate and become public records. On the other hand, trusts are more complicated and expensive to set up, but they don’t require probate and offer privacy and asset management.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost if you purchase a policy. It helps us keep the lights on!

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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