When working out an estate plan, the big choice is usually between trusts and wills. If you are new to estate planning, how do you know which to choose? Forbes explains the differences between wills and trusts to help you figure out which you need.
Wills are more affordable to create than trusts. However, after you pass, the legal fees of probate court will cost your loved ones. The process is longer and has to pass through court before your beneficiaries can access the inheritance. What many people like about wills is that they are simpler to draft and cost-effective when it comes to drafting.
Trusts put you through more legal formality to create. Many people draft a trust, but then forget to transfer the legal transfer over. When you do this, the trust winds up with no value. A lot of the inconvenience with trusts comes from a lack of realizing the work that you need to put into a trust.
Many people draft a trust and then forget about it. With a will, you are more likely to remember to update it regularly and whenever there is a big life change. Trusts also need regular updates.
The big difference comes after you pass. Your trust property does not need the courts to manage your estate. Instead, the trustee takes over and distributes the property according to your wishes. When you have a will, your property must pass through probate. The truth is that many estates have both a will and a trust. It is a matter of choosing one vehicle to transfer the majority of your wealth.