Many of us know that a will takes effect after death, at which point your wishes for your asset distribution are carried out. But what if you want to see those assets distributed now in order to witness the good they can do? That’s the benefit of a trust.
Below, we briefly discuss the pros and cons of wills and trusts and why you might choose one over the other. At the same time, know that you don’t necessarily have to choose: a trust can easily be used to supplement your will.
- A will is a legal document that tells your family and friends where you would like your property and assets to be distributed upon your death.
- Wills may only allow you to distribute assets that are in your name.
- You may appoint a representative who is legally responsible for carrying out your directives as they are written.
- Wills must pass through the probate system in the courts. The courts oversee the process and ensure that your property is distributed exactly as you prescribed.
- As a result of passing through the probate process, wills and their directives become a matter of public record.
- Wills allow you to specify funeral arrangements, appoint a guardian for your children, and specify other details that are not allowed by a trust.
- Trusts are legal agreements whereby one party (a “trustee”) is the legal holder of properties or assets that will be distributed to another party (a “beneficiary”).
- Often there are two types of beneficiaries: those who receive the gifts of the trust during their lifetimes and another set who receives them after the first set dies (example: children and grandchildren).
- Trusts are appealing to many because they allow you to distribute your assets before your death.
- Because they don’t have to go through the probate process in the courts, trusts may be kept private and thus not a matter of public record.
- Trusts allow you to distribute only that property that is legally placed in the trust itself.
There are several options for trusts and wills, and although they are related, they are not mutually exclusive. Many people choose to distribute particular items in a trust before their death, with the rest to be distributed via a will at a later date.
If you’re not sure which is right for you, be sure to think through all of these items with a trusted attorney who can help you draft the contract that is specific to your wishes.