At Alvarez Law Group, we strongly believe in putting a plan in place to preserve your future and provide for loved ones after you’re gone. What this plan takes will be different for each situation. Some estates only need a will to establish their plans, other estates that are more extensive and involved might need a trust.
It’s important to understand the differences between a will and a trust, so we want to explore four key differences you should understand when making your decision.
Complexity
A will is often referred to as a “simple document” because when you craft a will you craft a single document to define your plans. Wills can be changed over time but will often stand as the lone representation of an estate plan. You will define what assets you have and what happens to those assets after your death.
On the opposite end, trusts are more involved. A trust will include more details about what assets you have, where they’re going, and when those wishes will be carried out. Because trusts can be executed at any time you will need to lay out any parameters that must be met in order for your wishes to be carried out.
Flexibility
This brings us to the next key difference: a will is able to be altered at any time, but there are forms of trusts that cannot be altered. An irrevocable trust is one that must be funded (meaning you place assets into the trust throughout your lifetime) before you die and cannot be changed over time. This means you will need to truly commit to your plan at the time you create your trust.
Revocable trusts are able to be altered over time as the name suggests, but there is less protection in this situation. For instance, if you use an irrevocable trust the assets placed in the trust will not impact your eligibility for programs like Medicaid. However, assets placed in a revocable trust will impact your eligibility for those programs.
With a will, you can actually make changes at any time as long as you follow the same parameters in place when you crafted the document. The best way to make adjustments to your will is to work with your estate attorney to make sure those changes are done correctly.
Cost
You will most often hear that a will can save your estate money, but it’s a little more complicated than that. Ultimately, a will is a cost-effective way to put your wishes into place. However, there are other costs to consider.
The up-front cost of a will can be cheaper than a trust, but all wills must pass through probate court after the death of the person behind the estate. This means your estate will have to pay necessary court fees and could also mean your loved ones will need to pay their own attorney or other court fees to properly execute your wishes.
The court fees could be a larger factor over time, as well, because wills are more easily contestible. Trusts are generally more extensive and less likely to be successfully contested in the courts, so the court costs stay low when your wishes are carried out through a trust.
Privacy
The court process brings us to the last but, in some cases, the most important difference. Because wills are required to go through the probate process, your assets and their distribution will become public record. The court will read through your will and all your wishes when you have a will. When you have a properly-funded trust, your estate will not be subject to probate court. This preserves privacy for you and your loved ones.
Whatever form your estate plan takes, it’s important to have the right estate attorney by your side. Alvarez Law Group is a small firm that gets you big results. Contact us today to get your plan in place.
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