Will or Trust

Do you need a Will or Trust?

The differences between a will and a trust:

A will is a public document and as such, is available to anyone who goes down to the courthouse and wants to see how much you owned and to whom you left it.
A trust is a private document and is seen only by your family members, the trustee you name and any attorneys they select to help them settle your estate.

A will must be probabted--processed by the court which can take several months or possibly more than a year.  During this time, your assets may be tied up.  A trust does not need to get probated and your assets can be instantly distributed to your heirs.

Because you must assign (i.e. title) assets to your trust and some people forget to do that, it is always a good idea to have a pour-over-will which is basically a document that says any assets you forgot to assign to your trust, to do so.

What if I die without a will or a trust?

Not a good idea as each state has laws that determine how your property is distributed and to whom.

Typical rules would have your assets divided as follows:
If you die leaving a surviving spouse and children, your spouse gets one-half of your estate and your children share equally the remaining one-half. Special rules apply if you have children from a prior marriage and you have property acquired during your last marriage as well as separate property.

If your children are minors, your surviving spouse, in order to use their portion of your estate for their support or education, would either have to be appointed guardian of the children by the court or have someone else appointed, give a bond, make annual accountings to the court and obtain the court’s permission for many routine transactions. This will result in considerable expenses as well as legal difficulty.

Why doesn't everyone have a trust rather than a will?

Good question.  A trust is advanatgeous.  Many people feel comfortable drafting their own will but feel a trust is more complex and they need to pay an attorney severl hundred dollars. In fact, there are living trust kits that allow you to draft your own trust on your computer.

What are the advantages of having a will vs a trust?

Generally, the cost to prepare a will is less than the cost of preparing a revocable or living trust, if done by an attorney. With a trust, you must always remember to title property in your trust or the trust will have no value--it won't apply.  For example, if you purchase a stock, you don't purchase the stock in your own name.  You purchase it as "Mary Smith, trustee of the Mary Smith Living Trust, 12/1/11."  If you don't carefully make sure you always title investments, real estate and other items in the name of the trust, the power of the trust will not apply.