As estate planning attorneys, one of the most common questions we hear is "should I get a will or a trust?" The tough part is that there is not a right answer, it all depends on what fits your personal situation. The following illustrates the basic characteristics of each document and gives a practical example. After that, it is up to you, after all, we work for you!
A will directs the distribution of your assets and appoints your personal representative to oversee the distribution process. Upon one's death, the will must be probated, which includes notifying heirs and creditors, publishing notice in a local newspaper and having a judge supervise the entire process. Your will also becomes public record, so anyone can read it. The entire probate process typically takes six (6) months and, as shown below, probate is also an expensive process.
A trust is a document that directs the distribution of all assets held in the trust. A trustee, who is the person in charge of the carrying out the terms of the trust, is appointed in the document and takes control of the assets upon your death or incapacity, whichever comes first. If all of your assets are titled in the name of a trust, then probate is avoided. This means the time for distribution should be shorter, less expensive and your trust will not be public record. A trust is more expensive than a will to begin with, but the savings at death far outweigh the initial costs.
EXAMPLE:
Adam dies with a $250,000 estate. Prior to his death, Adam had VW prepare his revocable trust. His Trustee (the person in charge of his Trust after he dies), with help from VW, spends approximately $2,500 on expenses incurred while administering his Trust. The process of administering Adam's Trust did not involve a trip to court and took approximately 3 months. Adam's two children received approximately $122,500 each.
Eve dies with a $250,000 estate. Prior to her death, Eve had VW prepare her will. Her executor, with help from VW, probates Eve's Will and spends approximately $12,500. The executor, after getting permission from the Judge and making all of Eve's estate public record, sends a check for approximately $118,750 to each of Eve's children. The checks to Eve's children arrive in their mail approximately 9 months after her death.