Do I need a Will or a Trust? (or both?)

Client: “My friend just set up her trust. Do I need one?”

As with most things, the answer is not simple. Stated another way, “It depends.” Both are terrible, lawyer-ly answers that are bothersome even for me to type! But those are the “correct” answers.

For some, trusts are amazing estate planning tools that can also help plan for an individual’s possible future incapacity. But trusts are not one-size-fits-all, and many people are best served by the “simpler” estate planning tool of a Will. And, if you have minor children, you need a Will as it is the only document that will allow you to name a guardian for your children. (In fact, most people who have Trusts also have a Will.)

What is a Will? A Will is a tool that allows an individual to control how his or her assets will be distributed upon the individual’s death. They are usually less costly to establish and lost costly to manage than are trusts. Wills can be used to distribute probate assets, to designate guardians for minors, and even to establish trusts. In the Will, the individual will designate an Executor to administer his or her assets. When an individual dies, his or her Will will be offered by the Executor to the Surrogate’s Court for probate. During the probate process, the Court will assess the validity of the Will and will supervise the distribution of the individual’s assets.

Many have heard horror stories about probate, but in truth, it is *usually* rather seamless and not exceptionally time-consuming. There are few potential wrinkles in probate: Individuals who are named in the Will and those who would have taken under the laws of Intestacy are notified of the Probate proceedings, which, in strained family situations, can delay the process. Also, though probate is not usually a terribly time-consuming process, distributing assets via probate is a lengthier process than distributing them through a trust. Further, any filings in Surrogate’s Court become public documents. For many, these potential “wrinkles” are not major deterrents, but for some, a trust (often in conjunction with a “Pourover Will” which transfers certain assets not already in the trust upon the individuals death into the trust) is a “better” estate planning tool.

What is a Trust? A trust is a legal agreement between the grantor (the person who creates the trust), the trustee (either the grantor or a third party), and the beneficiary or beneficiaries. There are two major types of trusts – revocable and irrevocable. These trusts have various advantages and disadvantages, and I’ll encourage you to examine the article entitled “Trusts – Revocable v. Irrevocable” for an overview of those distinctions. Compared to a Will, trusts are more costly to create and manage, but, if the grantor’s assets are properly transferred into the trust, their estates can usually bypass the probate process, which allows their assets to be distributed more quickly. This becomes important if the grantor owns a business or some other asset that needs continuous management. Trusts also allow an individual to maintain privacy with respect to assets.

Call or email us today to set up an appointment to discuss your unique situation. At Seward & Seward, we are happy to craft a personalized estate plan that suits your needs.