Will vs. trust: which is best for you?
If you’re starting to think about what should happen to your assets after you pass, that’s a great step to be taking. However, you’re not alone if you’re feeling confused about the options. What’s a will? What’s a trust? Do they accomplish the same thing? If you’re trying to decide whether to create a last will and testament (“will”) or a revocable living trust (“living trust”), here’s a helpful guide to help you determine which is right for you.
What is a will?
A will, or a last will and testament, is a legal document that describes how you would like your property and other assets to be distributed after your death.
When you die with a will, the will is usually presented to a local probate court. This court then authorizes the executor to distribute your assets according to the instructions in your will — as long as there aren’t any disputes or other problems.
What is a living trust?
Like a will, a living trust is a legal document that lets you distribute your possessions to people and organizations after you die. However, a living trust “owns” the property you put into it, while still allowing you to maintain control. You can put most types of assets into a living trust, as long as they have value. For example, you could include your home, your bank accounts, jewelry or stocks.
A living trust is created by a “grantor” using a legal document, or “Declaration of Trust,” that names a “trustee.” The trustee will be responsible for holding the trust’s property and managing it according to rules and directions specified by the grantor, and for the benefit of the trust’s beneficiaries. Then, to fund the trust, the grantor transfers ownership of their property to the trustee.
When you create a living trust, as the grantor, you can name yourself the initial trustee. This means you can keep full control over your property in the trust and use it however you wish until your death. At that point, a “successor trustee” that you’ve selected will take over the trust and distribute the trust property to the trust’s beneficiaries. In this way, the successor trustee is similar to the executor of a will.
What are similarities between a will and a living trust?
Both tools can help you do all the basics:
- Distribute your assets: You can leave money, specific items, or a proportion of your estate to anyone you would like. You can also specify who stands to inherit those assets if your first choice passes away before you.
- Pick someone to carry out your wishes after you pass away: This person is called an “executor” in a will, and a “successor trustee” in a living trust. He or she will carry out your wishes as you’ve written them in your will. Choose someone you trust to distribute your assets properly.
- Take care of your minor children or pets: In your will or living trust, you can nominate guardians for your minor children and name beneficiaries for your pets, so you know that someone you trust will be taking care of them.
- Write funeral wishes: Leaving instructions for how you want your funeral to go can lessen the burden on your loved ones and give them guidance during a difficult time. You can also choose to record your funeral wishes using a simple tool on Ever Loved.
- Support your favorite causes: You can leave money or property to charities in your will, so that you will have a positive impact on the world long after you’re gone.
- Leave instructions for digital assets: Prefer that your Facebook account gets shut down after you’re gone? You can ensure that with your will by leaving instructions for how your executor or successor trustee should handle your digital assets. These can include email and social accounts, digital photos and videos, or even domain names you own.
What are differences between a will and a living trust?
The biggest benefits of a living trust are that they:
- Don’t have to go through the lengthy, expensive probate process. This can be very important if you live in a state like California, where probate courts are backed up and probate fees are especially high. This means that it will likely be longer before your beneficiaries receive any of your property.
- Protect your heirs’ privacy as probate proceedings are public, while trust proceedings typically are not
- Can be created with your spouse or partner as a “joint living trust,” so you can protect each other as well as your children or other beneficiaries. Joint wills are not recommended by most estate planning lawyers, because circumstances can change after one partner passes away, and joint wills are not as flexible as joint living trusts to make adjustments.
The biggest benefits of a will are:
- They are cheaper and simpler to create. Most estate planning lawyers will charge less for a will than a living trust. That said, there are online resources like FreeWill which will offer both wills and living trusts for free.
- They are much easier to maintain. Funding the trust is a lot of work. Whenever you acquire new property, you will need to buy it in the name of the trust or transfer it into the trust later. This is why many lawyers recommend that younger people use a will until they are older and their rate of property acquisition slows down.
How do you make a will or trust?
There are many sites online now where you can easily make a will or living trust in under an hour. As long as your estate is pretty straightforward, self-help will sites are a great option. Most of these sites charge a one-time fee or monthly subscription for their tools. Unless you have complex needs, they’re generally much more affordable than using an estate attorney and you’ll end up with a similar document. To avoid fees altogether, check FreeWill and see if it fits your needs. On FreeWill, you can create a legally valid will or living trust by filling out their online questionnaire, downloading your finished will forms, and following your state-specific instructions for witnessing and signing your will.