While a trust is more expensive and tedious to set up than a will, it gives you more control over how to distribute your assets when you pass away.
If you don’t want the state you live in to decide what to do with your assets when you pass away, your two options to handle the matter are to establish either a will or a trust. But what’s the difference between the two?
A will is a legal document that states how you want your affairs to be handled. This is an essential component of estate planning, and there are several DIY options for making a will, but I strongly recommend reaching out to a professional when writing yours. I’ve seen many DIY will turn into a complicated mess for the family of the deceased because they were poorly crafted.
Furthermore, while a will does allow you to decide what to do with your assets, it still has to go through probate court for confirmation. This means the state looks at it and decides what to do with your assets, and because they merely use it as a guideline, they may or may not comply with your wishes.
A trust, on the other hand, is an established fiduciary relationship. You determine who you want to handle your assets after you pass away. That person then becomes your trustee, and they make all the decisions regarding your estate with the guidance of the will you’ve put into place as well.
A trust also helps you avoid probate court, which makes matters a lot easier for your heirs and your trustee. It costs more upfront than writing a will, but it will save you money in the long run because, again, it helps you avoid probate court (the fees of which can range from 2% to 8% of your estate). Your executor is ultimately responsible for sorting out your estate, which could take six to 18 months even with a trust, but it’s a lot less expensive.
Additionally, trusts need to be actively managed, so you need to review them anytime you have a life change or every few years to make sure your wishes are still being administered.
Whether you choose a will or a trust to decide your estate, it’s important to reach out to a professional when doing so. If you have any questions about this topic, give me a call and I’d be happy to refer you to a great attorney or legal advisor.
As always, if you have any other real estate needs, feel free to reach out to me as well. I’d love to help you.