Sadly, none of us can predict when we will die. However, you can make plans now so that day and the time following is easier on your loved ones. If you’re starting to think about your estate plan, a question might start to form in your mind: What’s the difference between a will and a trust, and which one is right for me?
Using a will, trust, and other legal documents to specify your final arrangements after you pass away is crucial. Having these legal documents in place ensures that they know, follow, oversee, and honor your final wishes.
It’s unfortunate that many people pass away each year without leaving clear or written plans for those they leave behind. A drawn-out, complicated, and frustrating distribution of assets often ensues. Your loved ones will also go through the public, dreaded probate court process.
Most people don’t know the main difference between a Will and a Trust in Tennessee. Here, we will provide an overview and the pros and cons so you can decide which option works best for you. Will Gurus is here to help you plan and record your final wishes.
Wills Vs. Trusts
A Will determines where your assets will go after death and is fairly straightforward. You can appoint a guardian for minor children in yours, and it can allow an executor to produce a trust that benefits multiple parties. Wills can also help others make decisions based on your wishes after death.
A Trust can be used to specify what you want to happen if you become incapacitated and are unable to make your own decisions. A trust also avoids probate court. Trusts transfer ownership of a deceased person’s assets to a trustee, who must act according to the written wishes and help the beneficiaries.
An estate planning attorney creates your trust, and the benefit is it’s not a public document like a will. Larger estates and more complicated circumstances may opt to use both a will and trust for distribution purposes.
What are the advantages of a Will?
The perks of having a will include:
- Affordable and relatively simple to create
- Allows you to control where your assets go after you pass away
- Allows you to appoint guardians for your minor children
- It can help you correctly plan for after your passing
What are the disadvantages of a Trust?
There are a few cons of a trust, such as:
- Typically more expensive and take more time to initially draft
- Must move assets to the trust to fund it
- Can lose tax and asset protection advantages if trust laws are changed or violated
Considerations for creating a Trust
When creating a trust, there are several important considerations to keep in mind. First, you need to decide what type of trust best suits your needs now and in the future.
Second, you need to choose a trustee. The trustee is the person who will manage the trust and its assets. It is important to choose someone you trust implicitly and who has the experience and knowledge to properly handle the trust.
Finally, you need to determine how the trust will be funded. The funding source will determine how the trust can be used and how the assets can be distributed.