The Differences Between a Will and a Trust

Both wills and trusts can be used to distribute your assets, including real estate, after your passing. However, they function in significantly different ways, and deciding which option best suits your needs depends on your specific circumstances and estate planning goals. Here's a breakdown of the key differences:

Wills:

• Function: Wills dictate how your assets, including real estate, will be distributed after your death. They go through probate, a court process that can be time-consuming and public.

• Pros: Wills are relatively simple and inexpensive to create. They offer flexibility in distributing your property and allow you to name guardians for minor children.

• Cons: Wills only take effect after your death and do not avoid probate, which can be lengthy and costly. They also offer limited control over asset management during your lifetime.

• Real estate: Naming beneficiaries in your will specifies who inherits your property, but it doesn't prevent probate delays or potential legal challenges.

Trusts:

• Function: Trusts are legal agreements that transfer ownership of your assets to a trustee who manages them according to your wishes. You can create both living trusts, which take effect during your lifetime, and testamentary trusts, which take effect after your death and avoid probate. In the vast majority of situations, you are the trustee of your trust during your lifetime. This leaves you with full control over your assets with no interference.

• Pros: Trusts offer flexibility in managing and distributing your assets, including real estate. They can avoid probate, saving time and money. You can also set conditions for inheritance and designate how assets are managed to benefit your loved ones.

• Cons: Trusts are more complex and sometimes more expensive to establish than wills. They require careful drafting to ensure your wishes are carried out.

• Real estate: Transferring your property to a trust can avoid probate and allow you to control how it's managed and distributed. You can even specify ownership transitions based on certain events, like reaching a specific age or completing educational milestones.

Choosing the right option for your real estate:

• Simple situation, small estate: If your estate is relatively simple and you don’t own real estate, a will might be sufficient.

• Complex situation, larger estate: If you have real estate, diverse assets, or a complex family situation, a trust might be more beneficial.

• Avoiding probate: If avoiding probate is a priority, a living trust is the way to go.

• Flexibility and control: If you want to set specific conditions for inheritance or retain some control over your property during your lifetime, a trust offers more flexibility.

Remember, consulting with an estate planning attorney is crucial to determine the best strategy for your individual needs and ensure your wishes are legally sound. They can help you navigate the complexities of wills, trusts, and real estate inheritance to build a comprehensive estate plan that protects your property and loved ones. If you have any questions at all, I’m happy to talk you through them at no charge.