What is the Difference Between a Will and Trust?

Estate planning is a legal process that enables you to plan for your future by determining how your assets will be distributed after your demise. The plan may comprise various tools for different purposes, but the primary purpose is to make estate division more seamless for your loved ones. Wills and trusts are the most commonly used tools.

Estate planning lawyers in Bloomfield Hills define a Will as a legal document that explains how property should be distributed to beneficiaries after death. On the other hand, a Trust allows you to transfer assets through a trustee who manages and distributes them as per your wishes. You can use trusts throughout your lifetime, which can continue to be effective after your demise.

If you wish to incorporate both tools in your estate plan, it’s vital to understand how they differ. Doing so can help you analyze whether they will help you realize your estate planning goals. Wills attorneys in Bloomfield Hills mention the following key differences:

Asset Distribution

When creating an estate plan, you must first identify all your properties, investments, and personal belongings. A Will dictates how they will be distributed without assigning a beneficiary designation after your death. A trust lets you manage your property during your lifetime while allowing for expeditious transfer upon your death.

Privacy

A Will must go through a probate court, where it will be validated before the distribution of assets. The process can be lengthy and is subject to public scrutiny, exposing your family affairs to strangers. Trusts often bypass probate, keeping the estate affairs private.

Effective Date

A Will takes effect after your death, while a trust comes into effect once you fund and sign it. Besides, trusts often take priority over Wills. It’s essential to consult extensively with estate planning experts to understand how this may affect your plans.

Setup Process

Bloomfield Hills Wills lawyers say a Will is easier to set up than a trust. A Will is a written expression of your wishes for your estate after your demise. On the contrary, a trust is more complex, requiring more legal documents and a formal setup process that may require the involvement of skilled Bloomfield estate planning lawyers.

Cost

You may incur no cost for creating a Will if you do it yourself, but you run the risk of making mistakes that can cost your beneficiaries much more. Wills are less extensive and complex than Trusts and cost less immediately, but you will likely pay more overall due to probate and court costs and fees.

Suitability

A Will would suit estate planners who have adult dependents, or specific wishes for end-of-life care and a straightforward distribution plan.. However, a trust could benefit you more if you have minor children, if you wish to distribute your assets over time as your children grow, and if you want to distribute your assets while alive, which can help you reduce estate taxes or avoid probate.

Estate Taxes

A Will won’t help you avoid estate taxes, which can be between 18% and 40% if your estate is worth above $13.99 million dollars. Irrevocable trusts can help you avoid or reduce estate taxes while shielding your assets from creditors. However, revocable trusts don’t offer tax benefits but can help your loved ones avoid probate and let you control distribution of assets over time even after you have passed away..
These crucial considerations can help you decide whether to create a Will or trust. Lawyers with extensive knowledge of Wills and trusts can evaluate your estate and case specifics and advise you on approaching your estate plan.

Do I Need a Will and Trust in My Estate Plan?

You may feel like you don’t have enough assets to need a Will, but this may not be true. Bloomfield Wills lawyers recommend checking the state’s probate threshold, which is the dollar value of assets that would necessitate a longer probate process. This can help you decide whether creating a Will could make the process faster for your loved ones.

Besides, you may want to create a Will if the following conditions apply to you:

  • You have children under the age of majority. A Will can help you specify guardians for them.
  • All the property you own is worth more than Michigan’s probate threshold
  • You already have a trust but want to leave instructions for assets not held in the trust.

The following factors can also help you determine whether you need a trust in your estate plan:

  • You have minor children.  A trust prevents a conservatorship on their assets when they are under 18, and allows the funds to be distributed over time as they grow, unlike a Will where a chid gets everything once they turn 18.
  • Your estate is big enough to trigger taxes, and you want to minimize them. An irrevocable trust may be a suitable option.
  • You are at risk of incapacity and want someone to manage your estate while you’re still alive. A revocable trust could work in your favor in this case.
  • You have a child or dependent with functional needs or a disability. Your lawyers can help you create a special needs trust.
  • You want to protect your estate from creditors.
  • You want to control how the beneficiaries use the money you leave for them. In this case, a spendthrift or educational trust may apply.
  • You are concerned that an interested party may challenge your Will in court. Assets in a trust are not subject to probate.
  • You want to split your estate between your beneficiaries and a charitable organization.

A Skilled Estate Planning Lawyer Helping You Choose Between a Will and Trust

Navigating the nuances of Wills and trusts when drafting an estate plan can be difficult, but not when you have legal counsel from experienced Wills lawyers in Michigan. They can provide in-depth information about each tool’s pros and cons, helping you determine a decision that best favors you.

The Kendal Law Group, P.C., has a legal team to help you plan your future by leveraging the necessary tools. We can evaluate your estate size, beneficiaries’ needs, and estate planning goals to help you decide what best works for you. We are dedicated to helping you get peace of mind knowing your loved ones’ future is well-planned. Call us at 248-609-1718 to schedule a FREE consultation.