What Is the Difference Between a Will & Trust?

A will is a legal document that allows the testator to determine the recipients of specific assets in the event of their demise. The will appoints executors to ensure adherence to the instructions.

While most wills are direct instructions on assets distribution, pour-over wills will transfer assets into a trust. A will can expose families to the probate process as executors typically need court approval to carry out the wishes in a will.

A trust is a legal document similar to a will because it states asset distribution preferences. The trustor determines how assets are shared across trustees. Upon the trustor’s death or incapacitation, the trustees can distribute assets as stated in the trust document without court approval.

A revocable living trust is the most common type of trust. It allows the trustor to make changes to the legal document when necessary. Some of the common reasons for changes in the trust include changes in a financial situation and changes in the relationship between the trustor and the trustee(s).

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Which One Should I Have?

When talking about having a will or trust, it’s unrealistic to make blanket statements on choosing the right one. Both elements of estate planning are different, and the best one to choose will vary from one individual to another.

Deciding on the best one to choose starts with a proper assessment of your goals and needs. Working with a qualified estate planner increases your chances of finding the best solution for your family.

A major difference between a will and a trust is in their execution. Wills only take effect after the testator passes away. On the other hand, a trust takes effect once the trustor signs and funds it.

With a will, you can name guardians for young children, choose where your assets will go, and make other final arrangements. They are straightforward documents, but they are not without drawbacks. For example, there’s limited control over asset distribution, and they often require going through the probate process.

Trusts are more complicated, but they allow better control over the entire asset distribution process. With no court appearance, trustees pay fewer legal fees.

Would You Like to Avoid Probate Court?

Avoiding probate court is a key advantage of trusts. Some of the downsides of probate include the following:

  • The legal fees, executor fees, and associated costs make the process expensive. 
  • The probate process can take a long time to complete, sometimes exceeding two years. All assets are frozen during this time, denying your family living allowance in some cases.
  • The probate process is public, exposing your family’s assets to prying eyes. It’s easier for disgruntled heirs to contest the will in this situation.
  • The courts control the entire process, including the duration, total cost, and information exposed to the public.

A trust is the best way to help your family avoid this public and protracted process. However, a will is a good choice if you don’t want a trust and don’t mind using the courts for asset distribution. You still retain control over where your assets go.

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Are Trusts Only for Wealthy People?

A common misconception in estate planning is that trusts are for wealthy individuals. However, this is not the reality. Anyone can use trusts when putting their affairs in order.

Therefore, even though Hollywood has perpetuated terms like “trust-fund kids” and made trusts look like a tool for only the rich, they are for everyone.

Focus on choosing the best way to distribute your assets. Don’t assume you’re not the target audience for any estate planning method. Work with your attorney to select the best options for your situation.

No Plan Is No Way to Plan | Contact the TGQ Law Firm

Don’t ignore your estate planning until it’s too late. Speak to an estate planning attorney if you need more help to make sense of it all. You can find an estate planning attorney in Ann Arbor, MI, at The TGQ Law Firm.

Terrence G. Quinn, Esq., president of the law firm, is a Michigan estate planning attorney with decades of experience. Our team excels at making the estate planning process less stressful and less confusing. Let us provide you with a plan that’s best for your family. Schedule a 15-minute no-cost consultation or contact us at (734) 707-3232 today.

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Disclaimer: This article is not intended to be legal advice. Everyone’s situation is different and legal advice is only properly given after having reviewed your specific situation.