Wills vs. Trusts – When considering estate planning options, which is better? A will or a trust?
You’ll want to make sure to explore all the possibilities when it comes to planning for your estate. Both wills and trusts are responsible for transferring estates to their rightful beneficiaries, but here’s the biggest difference; only a trust can keep your estate out of probate court. And if you die without a will or other estate planning, the distribution of your assets will be resolved by state law.
Wills vs. trusts explained
When it comes to estate planning in Arizona, you’ve got some flexible options. Although it may be tempting to use the terms will and trust interchangeably, a will is actually very different from a trust. While both ultimately determine the allocation of assets, a will doesn’t go into effect until after death. On the other hand, a trust is effective as soon as it is signed and funded.
Wills
Wills are simple documents that detail your wishes after your death. These wishes include but are not limited to:
- Guardians for kids and/or pets
- Designations of specific or valuable assets
- Final arrangements
Making a will is relatively easy and frankly less expensive (while you are alive anyway – but more about that later). But a will offers limited control compared to a trust. When it comes to the distribution of assets, relying solely on a will could result in assets being tied up in probate.
And that is where that bargain-basement will becomes the most problematic. It may save you money while you are alive, but may cost your loved ones you leave behind thousands in legal fees and months wasted in courts.
Trusts
Trusts can get more complicated – and be more expensive to set up – but they offer some great choices that allow you to retain control while safeguarding your assets for the future. Creating a trust, such as a revocable living trust, provides many benefits, including:
- Control over how your assets are distributed
- Extensive coverage to include any asset in the trust
- Flexibility in creating your support system
Creating a trust requires that assets be transferred into it, making it a more intensive process than creating a will.
But trusts can be extremely helpful in avoiding probate so that the personal parts of the process can stay within the family, be far less expensive to execute, and (if written properly) will avoid probate for your beneficiaries.
When do wills and trusts take effect?
One of the main differences between wills vs. trusts is the way in which they take effect. A will does not go into effect until after death. In contrast, a trust takes effect the moment it is signed and funded. A living trust can help you retain control over your assets and make changes while you are still alive, then transfers to the trustee upon your death. Revocable trusts can be changed or terminated, while an irrevocable trust cannot.
What is probate and why do you want to avoid it at all costs?
Probate is the court-supervised process of divvying up your estate after your death. If you haven’t completed comprehensive estate planning, probate can be a costly and drawn-out process. If your estate goes through probate, it can keep your loved ones from getting their inheritance in a timely manner – sometimes for months before there is a ruling or a resolution.
The clear winner of wills vs. trusts? The trust.
So if your ultimate goal is to avoid probate (and yes it should be), the clear winner of the wills vs. trusts debate is the trust.
The trust makes the process easier on everyone, especially since it’s best to avoid probate altogether. One way to guarantee that your estate avoids going through probate is by creating a revocable living trust. A revocable living trust protects your assets as they are passed down while keeping the distribution of assets private. A will cannot be used to bypass probate and when the process ends up in court, your assets and family laundry can be made public for all to see.
Talk to one of Evergreen’s experienced estate planners!
Comprehensive estate planning may include having both a will and a trust. Because they serve different purposes, having both a will and trust is crucial to a smooth transition. At Evergreen Estate Planning, we recommend having both! While a will works to declare and carry out final wishes, a trust handles the management of assets during a lifetime and after death. Evergreen handles estate planning in the greater Phoenix area and Maricopa County, including Mesa, Scottsdale, Gilbert, Chandler, Tempe, Phoenix, Glendale, Queen Creek, Peoria, and Paradise Valley.
Since trusts and wills are separate documents, there isn’t one that’s necessarily better than the other. But there are certain protections provided by a trust that a will cannot offer. If you are looking to avoid probate, protect your inheritance against creditors, find out how your government benefits apply, or reduce estate taxes, talk to an experienced estate planner at Evergreen about creating a trust. We can help you find an estate planning solution that works for you and the future of your family.
