Life is unpredictable; therefore, it is important to plan for the future and protect your assets with estate planning. If you have ever done estate planning, chances are that you are familiar with the terms “wills” and “trusts.” However, do you know their differences?
While wills and trusts have a lot of similarities, there are some distinctions between them. Both also have their advantages and disadvantages. In this blog, we will explore their differences as well as their pros and cons.
What Are Wills and Trusts? How Are They Different?
A will is defined as a legal document that determines who will receive your properties and assets after death. It also contains details of your executor, who is responsible for carrying out the instructions of your will and managing your estate. Specifically in Utah, a living will, known as an advance directive, can be included in your will. It details your medical preferences in case you become incapacitated.
A trust is a legal arrangement in which a trustee holds and manages assets on behalf of a beneficiary. The trustee then has to handle the assets according to the terms and conditions of the trust.
Wills and trusts have two distinct differences. Firstly, a will can only take place after the settlor’s death, while a trust can take place throughout a settlor’s lifetime or after his or her death. Secondly, a will must go through probate, while a trust does not. Probate is a court-supervised procedure that can be time-consuming and expensive.
Pros and Cons of a Will
Simplicity and flexibility are two advantages of a will. For people with uncomplicated real estate, creating and modifying a will is a popular choice because of its simplicity. It also has minimal legal requirements and usually doesn’t require the assistance of attorneys. Wills are also flexible because they can be modified during your lifetime. That means if your life circumstances change, you can easily change or update it accordingly.
Two disadvantages are that one must go through the lengthy process of probate to obtain a will and the lack of privacy after death. Probate is a long, expensive, and public process. It can also be more complicated if you have multiple real estate properties in different states, which leads to assets distributed at a later time to your heirs. In addition, a will becomes a public record after your death. That means anyone can access your personal information, including the details of your assets and beneficiaries.
Pros and Cons of a Trust
Two advantages of a trust are that it provides privacy and offers asset protection. Upon your death, a trust does not become a public record. Therefore, the details of your assets and beneficiaries are kept private. Moreover, a trust offers incapacity planning, which provides you with the ability to appoint a trustee to manage your assets if you cannot do so yourself as a result of sickness or disability.
Two disadvantages of a trust are that you would have a loss of control and it is a complicated process. Once the assets are transferred to a trust, the trustee would manage them on your behalf. You might have little to no control over how the assets are managed or distributed. In addition, setting up a trust requires drafting complicated documents, keeping up with ongoing administration and management, as well as following complex rules that govern trusts.
Esplin | Weight Can Help
With Esplin | Weight’s elite team of trust lawyers in Utah, you don’t have to be stressed about handling your wills and trusts alone. We are experienced trust attorneys whom you can rely on. We can provide you with all the advice and information you need.