When Should You Choose a Trust Over a Will in Estate Planning? 

So you’re trying to figure out this whole estate planning thing. You’ve heard you need a will, but now folks are mentioning something called a trust? What gives – aren’t they basically the same?

I get the confusion all time time from new clients. The main thing to remember is that trusts and wills complement each other in estate planning, but are very different documents with distinct purposes.

The biggest difference comes down to how they function during your lifetime versus when you pass away. While wills specifically deal with transferring your assets after death, trusts give you far more control and options right now.

What is a Will? 

A will, often referred to as a last will and testament, is a legal instrument that allows you to dictate the distribution of assets upon your passing. It serves as a crucial roadmap for your loved ones, outlining your wishes and instructions for the management and transfer of your estate. 

While wills are a common component of estate plans, it’s important to recognize their limitations. Wills typically undergo the probate process –  a court-supervised process that can be lengthy and costly. 

Additionally, wills become public records upon your demise, meaning that the details of your estate, including asset distribution, become accessible to anyone. If you don’t want your assets to become public knowledge after your death, you should consider this during the planning process and create a trust to dictate how assets are distributed.

What is a Trust?

In contrast to wills, trusts offer a more versatile and confidential means of asset transfer. A trust is a legal entity established to hold your assets for the good of designated beneficiaries. Unlike wills, trusts can take effect during your lifetime, affording you greater control over the distribution of your assets and the management of those assets both before and after your passing.

Who Needs a Trust Instead of a Will? 

Estate plans often include both wills and trusts depending on the situation. But when is one better than the other? The Browne Firm will help you decide this during the estate planning process. 

Wills work well for a few specific scenarios:

  • Naming Guardians for Minor Children — Wills allow you to designate guardians to care for any minor children if you pass away. This provides clear legal authority for your chosen caregivers.
  • Transferring Basic Levels of Assets — If your assets are under the estate tax threshold (e.g. $5.85 million in New York), a will can sufficiently transfer your property and possessions.

Wills go through probate, so they work best for smaller, less complex estates.

Who Needs a Trust?

Trusts provide additional benefits in many situations where wills come up short:

Avoiding Probate

A revocable trust lets your assets transfer directly to beneficiaries, avoiding delays and public processes of probate court. Unlike wills, which undergo probate and become part of the public record, trusts offer privacy and discretion by avoiding probate proceedings and maintaining confidentiality regarding your estate’s details.

Tax Minimization Planning

Irrevocable trusts can reduce potential estate taxes even for high-net-worth individuals. For individuals with significant wealth, a trust can serve as a valuable tool for minimizing estate taxes and preserving assets for future generations.

Special Needs Dependents

Supplemental needs trusts provide assets for recipients with disabilities without impacting eligibility for public assistance.

Blended Families

Trusts allow precisely dictating asset distribution rather than an automatic equal split. If you have a blended family, minor children, or dependents with special needs, a trust can provide explicit instructions for asset management and distribution, ensuring that your loved ones are adequately cared for.

Deciding on the Optimal Mix of Wills and Trusts

The best solution for most involves a revocable living trust as the core estate plan component enhanced by irrevocable trusts addressing specialized needs around taxes, heirs, etc. Estate planning is not a one-size-fits-all endeavor; it requires careful consideration of your unique circumstances, priorities, and objectives. 

That’s why it’s essential to work with experienced professionals who can provide personalized guidance and support tailored to your specific needs. The estate planning lawyers at The Browne Firm are seasoned estate planning attorneys who focus on crafting customized strategies to help you achieve your long-term financial and personal goals.

Whether you’re navigating complex family dynamics, preserving wealth for future generations, or seeking to maintain privacy and discretion, the team at The Browne Firm is here to provide the support you need. Reach out today to begin the journey toward securing your family’s legacy with confidence and peace of mind.

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