Deciding whether one should set up a will or a trust for particular estate planning purposes is dependent upon the circumstances. Preparing a will can be necessary to name beneficiaries, set up guardianships for minor children or even create a trust for incapacitated individuals.
On the other hand a living trust can be created to help avoid probate. Probate can be expensive and time-consuming and many individuals would like to find a way to avoid it if at all possible. As one attorney describes it, with a living trust one can “probate” one’s estate during their lifetime. Living trusts can be easily changed and are also revocable. It can also cut down on estate administration expenses as well as taxes.
Every individual’s estate is different and the complexity of administration can be dependent upon the circumstances. While a will may be adequate for the circumstances in one case, there may be other situations where trusts will need to be created in order that assets can be protected.
A living trust differs from a testamentary trust which does not come into existence until after someone has passed away. The trust must be drafted properly to begin with. In a living trust one is given the choice of personally acting as the trustee or naming someone else to be a trustee. The trust can also be made revocable or irrevocable. Choosing whether one would wish to make a trust revocable or irrevocable can be dependent upon one’s wishes. For example, a revocable trust allows for more control over the assets while an irrevocable trust could result in more tax savings.
Whatever the circumstances, it’s generally best to speak to an experienced attorney concerning your individual circumstances to make certain that any estate planning document meets your needs.
Source: The Times Dispatch, “A will or a trust?” Paula L. Peaden, April 25, 2014