Wills vs. Trusts: What’s the Difference?
Retirement is an exciting period of life. You finally have the time and resources to enjoy all the things you missed while working. However, it’s essential to plan for the future and set your affairs in order. Everyone knows the importance of wills, but few people are familiar with the concept of trusts. We’ll explore the differences between wills and trusts to help you make an informed decision on what’s best for your future.
A Personal Will
Wills and trusts are legal instruments used to plan estates and distribute assets but differ in function, scope, and execution. A will is a document that outlines your instructions distributing your assets after you pass away. It covers all your property, including financial accounts, real estate, personal possessions, and investments. It also names an executor who will oversee the instructions of your will. A will becomes effective only after your death and after going through probate.
A Personal Trust
A trust is a legal entity that holds property for the benefit of designated beneficiaries. You can create trusts during your lifetime, making it possible to transfer assets to your heirs while you’re alive. A trust can exist after your death, making it a useful tool for managing assets and ensuring your beneficiaries receive an inheritance according to your wishes. Trusts are more flexible than wills, and you can tailor them to meet specific needs, such as protecting assets from creditors or providing financial support for dependents.
Additional Differences
You should be aware of a few other differences between wills and trusts. We’ll explain two major discrepancies that could influence your future plans.
Document Privacy
A will is a public document, which means anyone can view it once filed with the probate court. Trusts are private, and their details remain confidential. Privacy is an essential consideration for people who don’t want to reveal how much they have or whom they’re leaving it to. Trusts also offer protection against challenges to your estate plan, as they aren’t subject to probate court supervision.
Cost of Generation
Cost is another factor to consider when deciding between wills and trusts. Wills are inexpensive to prepare, and they’re usually straightforward to execute. Probate fees and other costs may arise after your death, but they’re generally low. Trusts, however, are more complex to set up and manage, and they require ongoing maintenance. The cost of setting up a trust varies depending on the size of the estate and the complexity of the trust’s provisions.
Wills and trusts serve different purposes and offer various advantages. If you’re newly retired and unsure which option to choose, consult an experienced attorney who can guide you through the process. Vancouver Wills and Trust’s team of trust attorneys in Vancouver, WA will work with you to set up these specialized documents if you wish. We also handle the creation of wills or can make changes to your existing estate plans.