Estate planning is an essential undertaking. While it might be daunting to begin determining how your assets will be allocated after your death, doing it early can save you a lot of stress down the road.
You might be unsure about how to approach your estate planning. Wills and trusts are the most commonly recognized forms of estate planning documents, with wills being the most widely used of the two.
How can you determine which is the better option for you?
Start by comparing them. The following is a break down of the key differences between a will and a trust:
- Trusts can be executed while you’re still alive. In other words, you can begin providing assets to those you’ve named as recipients before you die—whereas wills are usually only executed upon your death.
- Succession requirements are different. Trusts don’t require succession, whereas wills do. Many people hope to avoid succession, also known in some states as “probate,” because the cost and length can be an issue. Succession is also a public event, whereas trusts can remain private.
- Wills are likelier to be challenged. Since trusts aren’t public, there are fewer opportunities for people to seek contests, whereas with a will, there are more circumstances favoring contesting it in court.
- Wills are less expensive over time. While a trust may be a better option for high-net worth people, wills are the most straightforward and economically accessible variety of estate plans.
- Living trusts allow disability to be considered. A will doesn’t allow a successor to be named before the testator dies in the event that they become disabled or incapacitated. On the other hand, trusts have provisions for appointing a guardian or conservator to handle affairs on behalf of the grantor if incapacitation should happen.
It takes some thought to determine whether a trust or a will is right for you. Both have numerous pros and cons, and your lawyer can help you weigh them according to your personal circumstances.