Key Differences Between Wills and Trusts: Which One Is Right for You?
At Sanders & Sanders, Attorneys at Law, we know how important it is to prepare for the future with confidence. As experienced estate planning attorneys in Upper Marlboro, Maryland, we help clients protect their assets, provide for their loved ones, and make thoughtful decisions that reflect their values.
Whether you’re just starting to think about your estate plan or you’ve been putting it off for years, understanding the difference between wills and trusts is a great place to begin. Read on for more information about the differences between wills and trusts, and about how an estate planning attorney can help you decide which is right for you.
An Overview of Wills
A will is a legal document that outlines how you want your assets distributed when you pass away. It also allows you to name guardians for minor children and state your final wishes, such as funeral preferences.
While a will is a straightforward way to express your intentions, it must go through probate. Probate is a court process that can take time and may result in delays for your beneficiaries. It's also public, which means anyone can view the contents of your will.
Exploring Trusts
A trust is an arrangement where a trustee holds and manages assets on behalf of named beneficiaries. Unlike a will, a trust can go into effect while you're still alive and continue after your death.
Trusts are often used to skip probate entirely, which helps keep your affairs private and speeds up the transfer of assets. They also give you more control over when and how your beneficiaries receive what you leave them.
Comparing Wills and Trusts
When deciding which option fits your situation, it's helpful to understand how each functions. Both tools can accomplish your goals, but they work in very different ways. Some key differences to think about include:
Privacy: A will becomes part of the public record during probate. A trust remains private and doesn’t need to go through probate.
Timing: A will takes effect after your death. A trust can manage your assets during your lifetime and beyond.
Control: Trusts give you more detailed control over how assets are used, especially useful for minor children or beneficiaries with specific needs.
Cost and setup: Wills are often simpler and less costly to prepare initially, while trusts may require more time and money upfront but save costs later.
An estate planning attorney can help weigh the pros and cons of each based on your personal goals.
When a Will Might Be Enough
For someone with a small estate and no complicated assets or family dynamics, a will might be the right fit. It covers the basic needs of many individuals, especially if there's no urgency to avoid probate.
If you have young children, a will lets you name a guardian in case something happens to you. That’s a critical component for many parents, even if they don’t have a lot of assets to leave behind.
When a Trust Makes More Sense
In certain situations, a trust can offer more advantages. It’s particularly helpful for people who want to avoid probate or set up specific terms for how and when beneficiaries receive their inheritance. Here are a few examples where a trust can be especially useful:
Owning property in more than one state: A trust can simplify transferring assets without going through multiple probate courts.
Wanting to protect privacy: Because a trust isn’t a public document, your personal financial details stay private.
Providing for loved ones over time: You can direct your trustee to release funds gradually or only under certain conditions.
Planning for potential incapacity: A trust can allow someone you choose to manage your affairs if you're no longer able.
An estate planning attorney can help you decide whether these benefits align with your future plans.
Using a Will and a Trust Together
Many people choose to use both a will and a trust as part of a well-rounded estate plan. This approach offers the flexibility of a trust with the backup security of a will.
A “pour-over will” is often used alongside a trust to catch any assets not already in the trust. This makes sure that everything you own is covered and directed according to your wishes.
Key Considerations When Choosing
There’s no one-size-fits-all solution. Deciding between a will, a trust, or both depends on your personal situation, goals, and concerns. Some important points to consider are:
Size and type of your estate: Larger estates or assets with special considerations may benefit from the structure of a trust.
Family dynamics: If there are strained relationships or beneficiaries who need oversight, a trust provides more control.
Desire for privacy: If keeping your financial matters private is a concern, a trust may be preferable.
Time and money: While trusts may cost more initially, they can prevent longer, more expensive probate processes later.
An estate planning attorney can help evaluate these factors and explain how each option would work in practice.
Updating Your Estate Plan Over Time
Creating an estate plan isn’t a one-time event. Life changes, and your estate plan should change with it. If you get married, divorced, have children, or experience financial changes, it’s a good idea to revisit your plan.
Even if nothing major has happened, checking in every few years with an estate planning attorney makes sure that your documents are up-to-date and still reflect your wishes.
How Probate Affects Each Option
One of the biggest differences between wills and trusts is how they interact with probate. Probate is often slow and can reduce the value of the estate due to court fees and administrative costs.
A trust avoids probate entirely, which can mean quicker distribution of assets to beneficiaries. It also prevents your personal affairs from becoming public, which is appealing to many people who value discretion.
Guardianship and Minor Children
If you have children under 18, naming a guardian is one of the most important decisions you can make. This is only possible through a will, which is why some people with trusts still choose to have a will in place.
You can also use a trust to control how assets are used for your children’s education, health, and general welfare. This makes sure that their inheritance is managed responsibly.
Flexibility and Asset Management
Trusts offer greater flexibility when it comes to managing and distributing assets. You can decide when your beneficiaries receive their inheritance—whether it’s in stages or only for specific needs.
This level of detail can be very helpful for protecting assets from poor decision-making or outside influences. An estate planning attorney can help draft a trust that includes terms unique to your goals.
Tax Implications and Long-Term Benefits
While taxes may not be a major concern for everyone, larger estates may face estate taxes. Trusts can be structured in ways that reduce the impact of these taxes on your beneficiaries.
By planning in advance with an estate planning attorney, you can preserve more of your estate for the people you care about and reduce unnecessary expenses.
Planning for Disability or Illness
One advantage of using a trust is the ability to plan for the unexpected. If you become ill or unable to manage your affairs, a successor trustee can step in without the need for court involvement.
This makes trusts not only useful for distributing assets after death, but also for protecting and managing them during your lifetime if your health declines.
Benefits for Business Owners
If you own a business, protecting that business and planning for its continuation is important. A trust can include specific instructions for how the business should be handled if you pass away or become incapacitated.
An estate planning attorney can help business owners structure a trust that supports smooth transitions and avoids disruption to daily operations.
Peace of Mind and Personalization
One of the most important reasons to create an estate plan is peace of mind. Whether you choose a will, a trust, or both, the right plan reflects your personal wishes and helps prevent conflict among loved ones.
With help from an estate planning attorney, you can tailor every part of your plan to your specific situation, giving you confidence that everything is taken care of.
Build Your Custom Estate Plan Today
At Sanders & Sanders, Attorneys at Law, we’re committed to helping you create a thoughtful, legally sound estate plan that reflects your values and priorities. We serve clients throughout Clinton, Bowie, Fort Washington, Largo, and Washington D.C. Whether you’re considering a will, a trust, or both, our experienced estate planning attorney is here to guide you every step of the way. Contact us today to get started.