“Should I have a Will or a Trust?” “What is the difference?” “Do I need a Will?” “What is a “living trust”? “Someone told me I should get a living trust….”
I’ve noticed that there are some questions that I encounter frequently in my estate planning practice. It has been a while since I have posted anything in the blog/news section here so I thought I would make a post that answers some of these questions.
Estate planning is a crucial process that allows individuals to protect their assets and ensure the orderly distribution of their wealth after their death. Wills and trusts are two common estate planning vehicles that each serve distinct purposes.
Wills: A Will, also known as a Last Will and Testament, is a legal document that outlines an individual’s wishes regarding asset distribution after their death.
Probate Process: A Will typically goes through the probate process, where a court validates the document and oversees the administration of the estate.
Executor: The Will designates an executor who manages the estate, pays debts, and ensures assets are distributed according to the testator’s wishes. In South Carolina, we call this person a “Personal Representative” instead of an “executor” but the duties and responsibilities are the same.
Testamentary Guardianship: Wills allow individuals to appoint guardians for minor children, ensuring their care and protection.
Some potential advantages of a Will over a Trust are:
Simplicity: Wills are relatively simple to create and amend, making them suitable for individuals with straightforward estate planning needs.
Flexibility: Wills provide individuals with the freedom to distribute their assets as they desire, within legal limits.
Some things to Consider:
Probate: Wills are subject to the probate process, which can be time-consuming, costly, and may lack privacy.
Limited Incapacity Planning: Wills do not address incapacity during an individual’s lifetime, potentially requiring court intervention.
Trusts: A trust is a legal entity created to hold and manage assets for the benefit of designated beneficiaries.
Avoidance of Probate: Assets held in a trust typically bypass the probate process, providing a more efficient and private distribution of assets.
Trustee: A trustee, appointed by the trust creator, manages and distributes the assets according to the trust’s terms.
Some potential advantages of a trust over a Will are:
Probate Avoidance: Trusts offer the benefit of bypassing probate, reducing administrative delays and costs.
Incapacity Planning: Living trusts allow individuals to plan for incapacity by appointing a successor trustee to manage their affairs seamlessly.
Privacy: Trusts offer a higher level of privacy, as they are generally not subject to public scrutiny.
Some things to consider when evaluating a trust as an estate planning vehicle include:
Relative Complexity: Trusts can be more complex to establish and maintain compared to wills, requiring proper funding and ongoing administration.
Cost: Establishing and maintaining a trust may involve higher upfront costs and legal fees.
When considering Wills versus trusts as estate planning vehicles, you must carefully evaluate your own unique circumstances, goals, and preferences. Wills offer simplicity, flexibility, and are suitable for individuals with straightforward needs. Trusts provide probate avoidance, incapacity planning, and enhanced privacy but may require greater complexity and cost. Consulting with an experienced estate planning attorney is crucial to determine the most appropriate option based on your individual needs and goals. Ultimately, the chosen estate planning vehicle should align with your goals of preserving assets, protecting loved ones, and ensuring a seamless distribution of wealth in accordance with your wishes.