One of the most common questions new clients have about estate planning deals with the difference between a will and a trust. Most adults are generally familiar with each of these documents but don’t understand the specific purpose and scope of each. Here we’ll explain some of the key features of a will and a trust to help you understand which estate planning option may be right for you.
A will, also known as a Last Will and Testament, allows you to decide how certain matters should be resolved in the event of your death. A will can define which assets should be included in your estate and how to distribute them, assign a personal representative for your estate, or appoint guardians for your minor children.
Wills can be useful in many situations, and their simplicity can be appealing. But wills also have several drawbacks, including the need to go through probate court. During the probate process, a judge will review your will and determine if it is legally valid. Once the will is determined to be valid, the court will supply your personal representative with the documents necessary to administer your estate. Besides being time-consuming, this process can also be costly. In Michigan, an informal, uncontested probate proceeding is estimated to cost 3-8% of the deceased individual’s net worth.
A lack of privacy can also be an issue with a will-based estate plan. Your personal representative must share a copy of your will with the probate judge. This means that your will is going to be made a public record, and anyone can go to the courthouse and request a copy of the court documents related to the case, including your will.
For many people, the path to a solid estate plan begins with a will but ends in a courtroom.
Many people incorrectly believe that a trust is only for the very wealthy. But in fact, a trust can help your family understand your final wishes in greater detail. While there is usually a greater up-front cost associated with a trust, you may actually save money by avoiding probate court.
A trust allows you to name a successor trustee who will administer your estate according to your wishes. You can also use a trust to name beneficiaries, just like in a will. But unlike a will, a trust may include more restrictions or distribution rules for your heirs.
As long as a trust is properly funded and has ownership of the trustee’s assets after their death, then the property may be transferred directly to beneficiaries without having to go through probate court.
Finally, a trust can have some advantages over a will if the trustor – the owner of the property – becomes incapacitated and is no longer able to make financial decisions for themselves. Under a will, having a legal guardian appointed will require going through probate court. A trust, however, can include provisions for how your estate should be handled if you become incapacitated.
While a will is still an important estate planning tool and may be used in conjunction with a trust, the ability to avoid probate court is a considerable advantage to establishing a trust. If you want greater control over your assets after your death, a trust may be right for you.
The best approach to estate planning may not be the same for everyone, and your individual assets, family structure, and final wishes will determine which approach is right for you. Working with a knowledgeable Michigan estate planning lawyer can help you make the right choices for you and your family. Since 1992 Van Den Heuvel Law Office has been helping families create comprehensive, personalized estate plans that help surviving friends and family avoid confusion and tough decisions in a time of mourning. If you need assistance creating or modifying a will or trust, contact our office today to schedule a consultation.
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