Estate planning can be the difference between a steady and affordable transition for your family after death, and a chaotic, expensive one. We believe no family should move forward without a plan.
Estate planning is normally done through forming a trust or writing a will. We’ve previously talked about some of the differences, but we’re going to dive deeper into which is the right fit for your family.
Trust-based estate planning
A trust comes in several forms, but it ultimately serves the purpose of smoothly transferring your money and assets to beneficiaries of your choosing. If you have a trust, the process is more direct and requires little to no court involvement.
A third party will be in charge of ensuring the process goes according to your plan, but your trust will generally be straightforward which avoids unnecessary disputes.
Pros of a trust
Immediacy: a will takes effect when you die but a trust is effective once it is active and funded
Time: A trust ensures your assets are distributed at the time of your death without needing to go through the probate court process (which also avoids additional court fees)
Flexibility: While a trust allows immediate disbursement of your assets, a trust allows you to lay out more specific direction on when, where, and how specific assets are to be distributed instead of just immediately following your death
Building on your trust: unlike a will, a trust is funded throughout your lifetime and even grow instead of just being whatever is left when you die, transferring ownership of assets placed in the trust to the owner of the trust
Privacy: because you avoid a court date, the details of your trust can be left unknown to anyone you don’t want to know (including beneficiaries beyond what is paid out to them)
Tax benefits: irrevocable trusts are able to avoid some common taxes associated with estate planning
Cons of a trust
Cost: This is the most obvious problem with a trust is that it is more expensive upfront to put together but, as mentioned above, you avoid probate court and unnecessary attorney fees later
Lack of guardianship: You will not be able to layout guardianship for minor children through the formation of a trust
More paperwork: Trusts are more complex than wills, so you will find yourself taking on more complex paperwork throughout the process
Unable to be altered: Some trusts cannot be changed over the course of time
Will-based estate planning
A will is a much simpler process for divvying up your assets upon your death. You may find yourself opting for this if you have fewer total assets and minor children who will need guardianship upon your death.
In this case, an executor will be picked to take possession of your assets and distribute them as your will dictates.
Pros of a will
Simplicity: A will involves less paperwork and is often a single document dictating where your assets go after your death
Cost: Wills cost less for the individual(s) whose assets are being dictated (though there will be additional costs taken out after death through the probate process)
Flexibility: A will can be altered at almost anytime and for any reason
Cons of a will
Time: While the initial creation of a will can be quick, your estate will enter probate before assets are distributed
Lack of privacy: Your every wish will be read allowed in front of beneficiaries and court officials during the probate process and become public record
Easily contestible: Because the process is less thorough than a trust, it is easier for someone to challenge your will and force alterations that may go against your plans
No tax or credit protection: Unlike irrevocable trusts, all wills are subject to taxes and creditors can seize assets laid out in your will upon your death
Getting started
No matter which choice you believe fits your family, let Miller Law Firm handle your case with care and get your estate plan started today. Contact us and protect your legacy by planning for the future today!
