A will is a legal document that expresses your wishes for how you want your property distributed after you die. It also allows you to name a personal representative (also called an executor) who will manage your estate and a guardian who will care for your minor children if you have any.
A trust is a legal arrangement that allows you to transfer property to a trustee, who holds it for the benefit of one or more beneficiaries. A trust can be created during your lifetime (a living trust) or at your death (a testamentary trust). A trust can provide many advantages over a will, such as:
- Avoiding probate, which is the court process that oversees the administration of your estate. Probate can be costly, time-consuming, and public.
- Minimizing taxes, by reducing or eliminating estate taxes, income taxes, and capital gains taxes.
- Protecting your privacy, by keeping your estate plan confidential and not subject to public record.
- Protecting your assets, by shielding them from creditors, lawsuits, divorce, or irresponsible spending by your beneficiaries.
- Providing flexibility, by allowing you to change or revoke your trust during your lifetime, or make it irrevocable and permanent.
- Providing continuity, by allowing your trustee to manage your assets during your lifetime if you become incapacitated, and after your death for as long as you specify.
A will and a trust are not mutually exclusive. You can have both, and in fact, many people do. A common strategy is to have a living trust that holds most of your assets, and a will that transfers any remaining assets to the trust at your death (a pour-over will). This way, you can enjoy the benefits of a trust while ensuring that nothing is left out of your estate plan.
If you have any questions or want to start creating or updating your will and trust, please click here to schedule your Life and Legacy Kickoff Meeting with Attorney Robinson.