How To Decide Between A Will Or Trust

In the past we examined the differences between a will and a trust. So which is the best choice for you?

Pre-Game Warm Up

Before we dive in, let me reiterate that the best way to know is to speak to a qualified attorney. And remember that your trust or will doesn’t control all of your estate either.  Some assets are controlled by beneficiary and other ownership documents.

But keep in mind that just because you meet with a lawyer you still need to understand the basics. That will ultimately save you money and help you understand if you are indeed getting qualified advice.

Remember, not every attorney is completely objective. If your estate goes to probate and that attorney is called in to represent the estate, that lawyer will make much more money than if you create a trust and the estate is not subject to probate. More on that in a bit. Let’s get to work.

Do You Need Either A Trust Or A Will?

Some people don’t care what happens to any of their assets after they die. For those people, I don’t know why a trust or will would be important. They’d probably want at least a Health Power of Attorney but maybe that would be about it. Again, a lawyer would be a good person to ask.

But you still may not need either a trust or will even if you do care. Here’s why.

If all of your assets either name a beneficiary or are held as Joint Tenants, you may not need either document. That’s because even if you have these documents, the asset passes to the named co-owner or beneficiary regardless of what your will or trust says.

This doesn’t mean you don’t need to do any estate planning. But you should be aware that the way your assets are “held” or owned takes precedence over your estate plan.

Once you’ve gotten your estate plan in order, why not share the wealth?  Explain the importance of planning to your elderly parents.

Who A Will Works For

Depending on the state you live in, the kind of assets you own and the size of your estate, a will might be the way to go. This might surprise you, but State laws are actually more important than the size of your holdings when it comes to this decision. When one of my wealthiest clients moved to another State her attorney told her to ditch her trust and put everything into joint tenancy. I was very surprised by that recommendation but I’m not an attorney. What do I know? That’s why it’s so important to get the right council.

Also, if most of your assets have a survivor or beneficiary, and/or all you are worried about are your personal items, the Will might be sufficient (as long as you have your other estate planning documents in place such as your Health Power of Attorney).

Who A Trust Works For

If you don’t qualify under points A and B above, you need a trust. Other reasons you might want a living trust include:

• You want to maintain privacy.
• You want a quick disposition of your assets.
• You have an estate tax concern and are married.
• You want to avoid the time delays and expense of probate.

Bottom Line

I strongly encourage you to seek qualified legal counsel. You’ve worked all your life and you want to protect what you’ve achieved. Once you get the right advice, you can still use a legal service like LegalZoom to actually prepare your estate planning documents. That might be the best of both worlds because you’ll get expert advice and inexpensive execution.

What estate planning documents do you have in place? How did you decide what to do?