Planning for the future involves making important decisions about how your assets will be managed and distributed after you're gone. Two of the most common tools in estate planning are wills and trusts. 

While both serve the purpose of distributing your assets, they do so in different ways and come with distinct advantages and disadvantages. In this newsletter, we'll explore the key differences between a trust and a will and help you determine which option might be best suited to your needs.

What is a Will?

A will is a legal document that outlines your wishes regarding the distribution of your assets, care of minor children, and other matters after your death. Here’s what a will typically does:

• Distribution of Assets: Specifies how your property and assets will be divided among your beneficiaries.
• Appointment of Executor: Names an executor who will manage your estate, ensuring your wishes are carried out.
• Guardianship for Minors: Designates a guardian for any minor children.
• Funeral Arrangements: This may include instructions for your funeral and burial.

Pros of a Will:

• Simplicity: Wills are generally straightforward to create and can be updated as needed.
• Cost-Effective: Wills are usually less expensive to create compared to trusts.
• Guardianship: A will is the only way to appoint a guardian for minor children.

Cons of a Will:

• Probate: Wills must go through probate, a court-supervised process that can be time-consuming and costly.
• Public Record: Probate is a public process, meaning the details of your estate may become public.

What is a Trust?

A trust is a legal arrangement where one party (the trustee) holds and manages assets on behalf of another party (the beneficiary). There are several types of trusts, but a revocable living trust is one of the most common. Here’s what a trust typically does:

• Avoids Probate: Assets in a trust bypass the probate process and are distributed directly to beneficiaries.
• Privacy: Trusts are not part of the public record, so your estate details remain private.
• Control Over Distribution: You can set specific conditions for when and how your assets are distributed.
• Incapacity Planning: A trust can include provisions for managing your assets if you become incapacitated.

Pros of a Trust:

• Avoids Probate: Trusts allow for a quicker, more private transfer of assets without the need for court intervention. If you remember in our last newsletter, probate is costly, time consuming, and public. A trust can help you avoid it entirely.
• Flexibility: Trusts provide more control over how and when your assets are distributed.
• Incapacity Protection: Trusts can ensure your assets are managed according to your wishes if you’re unable to do so.

Cons of a Trust:

• Cost: While setting up a trust has a heavier upfront cost, remember that it’ll help you avoid court fees and all sorts if you just set up a Will. 
• Ongoing Management: Trusts require ongoing management and must be actively maintained.

When Should You Choose a Will?

A will may be the right choice if:

• You have minor children and need to appoint a guardian.
• Your estate is relatively simple, and you’re comfortable with the probate process.
• You want a cost-effective way to outline your wishes.
• When Should You Choose a Trust?

A trust may be the better option if:

• You want to avoid the probate process and ensure a quick, private transfer of assets.
• You have complex assets or want to set specific conditions for how and when your beneficiaries receive their inheritance.
• You’re concerned about incapacity and want to ensure your assets are managed according to your wishes.

Do You Need a Trust AND a Will?

In many cases, having both a will and a trust can provide comprehensive estate planning. A pour-over will, for example, can ensure that any assets not included in your trust are transferred into the trust upon your death, covering all your bases.

At Rutkowski Law Firm, we understand that every family’s situation is unique. Our experienced estate planning attorneys are here to help you navigate the differences between wills and trusts, providing personalized advice to ensure your estate plan reflects your wishes and protects your loved ones. Please reach out if you have any questions.