Unless you are an estate planning attorney like me, getting your affairs in order can be confusing. One of the most confusing can be understanding the difference between a will and a trust—and when you need one, the other, or both.
Why is it confusing?
- They can seem similar in that both help distribute your assets when you die, so people assume one, a will or a trust, can do it all.
- The name “trust” can come across as pretty elite, as if it were only for wealthy families (think Rockefeller, Kennedy, and Vanderbilt). That’s not true, of course. Trusts can benefit “regular” people who want to avoid probate, keep their affairs private, or control how assets are used.
- While they seem similar, they work differently. A will goes through probate court, while a trust avoids it if set up and funded correctly. But you still need a will in most cases—even if you have a trust.
- Funding a trust is often missed. You have to actually move your assets into the trust, such as changing title or beneficiaries. This step can be overlooked, and if so, the trust becomes useless when it matters.
Some individuals may decide that a will is enough for them, but they should remember that there will be no privacy when they pass away. Their assets, etc., will become public record. That may be ok with them, but maybe not. And I’ll take this opportunity to say, once again, everyone SHOULD have a will. Without one, it would mean you would die intestate, which means the state will decide who gets your assets. That might be ok with you. But what if you are a widow with two adult children, one who has been a loving and supportive child and the other who stole money from you, skipped town, and hasn’t been heard from since? The state doesn’t care – they will track down your estranged child if they can and divide your assets equally between your two children. Is that what you would want? Probably not. I know that might be an extreme example, but it brings to light the need to plan in advance so you can be assured your assets will be distributed as you wish. Whether you use a will AND a trust to do that is up to you. Why not call me so we can discuss your unique situation and ensure your estate plan will meet your goals?
Call me at 513-399-7526 or visit my website, www.davidlefton.com, for more information.