A Will or a Trust
The decision of whether you need a will or a trust is a complex decision that should result from a thorough analysis of your needs and wants. Estate Planning should not be a one-size-fits-all proposition
IntroductionThere are many decisions to make while you are putting together an estate plan. One decision is whether or not to use a Will or a Trust. Both are used to pass property to your heirs, devisees, and beneficiaries. They also have different features, powers, and manners in which they are carried out. Thus, the decision as to which one you should choose is not one that should be taken lightly.
WillsA will is a document that nominates a personal representative and provides your plan for the distribution of your property. A will must be probated, In other words, it must be filed with the Court and certain procedures followed before it is effective. A will is followed and completed, it has a finite duration. Lawyers generally charge less for a will, but there will be court fees and attorneys' fees when the Will is probated. A trust costs more and there will be attorneys' fees, but no court costs (unless there is a challenge to the manner in which the Trust is being handled. The ultimate costs depend more on how well you maintain and manage the documents and how much people fight over what they mean.
TristsA trust has a trustee who manages the assets that are part of the trust. A trustee can manage the assets after your death and provide distributions over time. In a famous Michigan case a lumber baron named Burt tied up his assets for 92 years. So, a trust can last for a long time. A trust does not require court oversight. Trusts are sometime used as will alternatives, where they distribute assets at the time of death. Some Trusts are used to protect against children squandering away their inheritance. Sometimes trusts are used for charitable purposes (Think of the names of the people at the beginning of a show on PBS) Trusts are easier to manage after you pass away, but part of this ease is related to lack of oversight. A lack of oversight can be problematic if the person who is the Trustee is not honest or fails to follows your wishes.
Closing remarksAs you can see there is a plethora of difference between the two, even more than where mentioned here. In some cases, however, they are treated as interchangeable. Estate planning is not one-size-fits all, so the many factors should be weighed to determine which is the best choice for you.