What’s The Difference Between a Trust and a Will?
You can think of a will and a living trust as two different tools that you can use to distribute your property after your death. Whichever way you choose to go, you’re still making sure that your wishes are respected and your family is provided for.
The difference is how your property is distributed. With a will, your property is distributed through the probate process, which can be costly and time consuming depending on the size of your estate. With a trust, your estate will skip probate and go to your loved ones with minimal cost and delay.
We generally find that a living trust is worth the cost of setting up for clients who own a home or other form of real estate. But, we invite you to read the rest of this page to consider the advantages and disadvantages of each before deciding which is best for you.
Advantages and Disadvantages
- Simple and inexpensive
- No need to re-title assets
- Must go through probate
- Cannot manage or restrict inheritances
- Not useful in case of disability or incapacity
- Becomes part of public record
- Avoids cost and delay of probate
- Can manage or restrict inheritances
- Provides protection in event of disability or incapacity
- Does not become part of public record
- More costly to set up than a will
- Must re-title assets
Living Trust or Will: Which One is Right for Me?
Estate planning is not one size fits all. When deciding between a living trust or a will, you must take into account the difference that each offers in the context of your unique family and financial situation.
As a rule of thumb, we’ve found that the cost-benefit of a living trust becomes most favorable when there is real estate involved. Even if it’s just a primary residence, the cost savings of avoiding probate can exceed $10,000. Compared to the cost of setting up a trust, the savings are apparent.
Aside from just the cost, living trusts tend to be a good choice for clients who are concerned about handing over a large inheritance to their children, either because their children are still very young or have shown signs of financial irresponsibility. A living trust allows these clients to manage and protect their children’s inheritance by restricting their access to the funds.
For client who have no real estate and/or aren’t worried about their children’s inheritance being mismanaged, a Will is often perfectly adequate.
Find out which is best for you by taking advantage of our free estate planning consultations.