A will is a written document that details the deceased person’s wishes, including but not limited to naming guardians of minor children, gifting objects and bequeathing cash assets to friends, relatives, or charities. A will will only become active after a person’s death. The most common type of will is called a testamentary will. This document states how you want your affairs handled and distributes your assets after you die.
Advantages of Wills
Relatively simple to create
Allows the testator to leave assets to anyone they wish
Can include care arrangements for children, pets, etc.
Disadvantages of Wills
May be subject to probate and possible challenges regarding validity
Can be subject to federal estate tax and income taxes
Becomes public record which anyone can access
In contrast, a trust is active the day you create. In a trust, a grantor can list the distribution of assets before their death. There are two types of trusts: revocable and irrevocable. Irrevocable trusts are often created for tax purposes and cannot be altered after they are created. A living trust can be changed at any time by the grantor. Most people prefer revocable trusts because it allows them to have more control over their assets.
Advantages of Living Trusts
Allows for the control of investments, assets and business interests while you are incapacitated
You could avoid probate if the trust is funded during your lifetimes
It will not become public record
You could avoid estate taxes
Can allow the grantor to leave assets to anyone they wish
Could avoid conservatorships if you become incapacitated of disabled
Disadvantages of Living Trust
Costs more to create
Costs more to administer
If the trust is not fully funded during the grantor’s lifetime, probate may still be necessary
Depending on the family, the trust may be subject to abuse or breach of fiduciary duty by the trustee because there is no probate.
To determine which would be a better fit for you and your family, contact us at firstname.lastname@example.org or 734-800-9912. Mingwei Yan PLLC offers flat rate package at a discounted rate for those looking to create a simple estate plan.