Trust or a Will? What’s the difference?



Will

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


Living Trust

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 yanpllcaw@gmail.com or 734-800-9912. Mingwei Yan PLLC offers flat rate package at a discounted rate for those looking to create a simple estate plan.