Planning your estate is an essential part of life because it gives you a sense of certainty about the future. Some key elements that individuals leverage when putting their affairs in order are wills and trusts.
You might wonder if you should establish a will and a trust or simply choose one for your estate planning needs. Understanding how these tools differ and work together can clarify why having both might be the most prudent choice.
What are wills and trusts?
When you have a will, you can rest easy knowing that you have a comprehensive guideline for the distribution of your assets among your beneficiaries and the care of your children. On the other hand, having a trust allows you to appoint someone you trust to oversee assets you intend to give specific beneficiaries eventually.
The main distinction between a will and a trust is that trusts will allow your beneficiaries to avoid probate. Your will has to be authenticated through a court-supervised process that can be slow and complicated. Additionally, a trust allows for a private transfer of assets to your beneficiaries, while the probate process automatically places your will into public records.
The limitations of having only a trust
You might have noticed that trusts offer significant benefits as compared to will. However, having a trust without a will limits your options during estate planning. Trusts aren’t all-encompassing because they can only protect the assets you put in them.
If you acquire property after creating your trust or forget to transfer certain assets into it, those items won’t be covered. Suppose you started your estate plan with a trust; you might want to consider a pour-over will. This entity can give you the safety net you need to secure any assets not included in your trust.
When might a will suffice alone?
While having a trust alone can be risky, there are instances when a will might suffice alone. You might choose to work with a will alone if you have:
- A simple estate
- Limited assets
- No desire to avoid probate
However, you might want to explore a trust as your estate planning needs become more complex. A trust may become necessary with the acquisition of significant assets or when your family becomes blended.
A trust is not a replacement for a will, nor is a will a substitute for a trust. These tools serve complementary purposes, working together to help ensure that all components of your estate are covered. Consulting a knowledgeable legal team can help you determine the best approach based on your unique situation.
