Who Needs A Trust Instead Of A Will?

Who Needs A Trust Instead Of A Will - Do I Need A Trust - Who Needs A Trust - Do I Need A Trust Or A Will

Who needs a trust instead of a will? 

In this article, you’ll learn about: 

  • when you’d need a trust instead of a will
  • the benefits and purpose of a will and trust
  • how a will compares to a trust
  • how you can use them together

Let’s dig in.

Table of Contents

The Hive Law Has Been Featured In

Get A FREE Consultation!

We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)

Who Needs A Trust Instead Of A Will?

A trust may be a better option than a will in several scenarios:

  • Probate Avoidance: If you want to avoid probate, the often time-consuming and costly court process for validating a will, you should consider a trust. Trusts can facilitate a quicker and smoother transfer of assets to beneficiaries.
  • Privacy Concerns: Trusts are private documents, unlike wills, which become public during the probate process. If you value the privacy of your estate details, a trust can help maintain that.
  • Future Incapacity Planning: Trusts allow for the management of your affairs if you become incapacitated. A successor trustee can take over, ensuring that your estate is in capable hands.
  • Complex Family Situations: In cases of blended families, or families with special needs children, trusts offer more control and flexibility in terms of asset distribution.
  • Estate Tax Considerations: If your estate is large and subject to estate tax, trusts can provide mechanisms to reduce or eliminate these taxes.

Read More: Do I Need A Trust To Avoid Probate

Do I Need A Trust Or A Will?

The choice between a trust or a will depends on:

  • your personal circumstances
  • your goals for estate planning
  • your financial situation 

Here are a few things to consider when deciding:

  • Size of Your Estate: If your estate is small, a will might suffice. But if you have a substantial amount of assets, a trust could offer tax benefits and more streamlined administration of your estate.
  • Probate Concerns: If you want to avoid probate, which can be a lengthy and public process, a trust might be the better choice. Trusts can expedite the transfer of assets to beneficiaries.
  • Privacy: If you want the details of your estate to remain private, a trust would be the better choice since it does not become a matter of public record, unlike a will.
  • Future Incapacity: If you want to provide for the possibility of your future incapacity, a trust can be beneficial. It can stipulate who will manage your assets if you become unable to do so.
  • Guardianship: If you have minor children and need to designate a guardian, a will is necessary. Trusts do not allow for the appointment of guardians.
  • Complexity and Cost: Trusts are generally more complex and more expensive to set up than wills. If your estate is relatively straightforward, a will might meet your needs.
  • Specific Distribution Requests: If you want to control when and how your beneficiaries receive their inheritance (such as setting age milestones or conditions), a trust offers this level of control.

It’s also worth mentioning that you don’t have to choose between a trust and a will. 

They can work together as part of a comprehensive estate plan. 

It’s recommended to consult with an estate planning attorney to decide the best path for your situation.

Read More: Who Owns The Property In An Irrevocable Trust

A Will vs Trust

A trust and a will are two distinct estate planning tools, and they function differently.

A Trust

A trust is a legal arrangement where one person gives control of their property to a trust to benefit beneficiaries. 

Trusts can be set up:

Key features of trusts include:

  • Avoiding Probate: Property and assets in a trust do not go through probate, which means they can be distributed to beneficiaries more quickly than assets in a will.
  • Privacy: Trusts are not public documents and do not become part of the public record, which is different from wills that are probated.
  • Control: Trusts can provide more control over when and how assets are distributed to beneficiaries.
  • Incapacity Planning: If the trustor becomes incapacitated, the successor trustee can manage the trustor’s assets according to the trustor’s wishes without court intervention.

Fill out the form on this page to speak with a trust lawyer

Read More: How Much Money Can You Inherit Without Paying Taxes On It?

A Will

A will is a legal document expressing an individual’s wishes regarding the distribution of their property after death.

Key features of wills include:

  • Simplicity: Wills are generally simpler and cheaper to create compared to trusts.
  • Guardianship: Wills can be used to nominate guardians for minor children, something trusts can’t do.
  • Probate: Wills must go through probate, a court-supervised process to distribute the deceased’s assets, which can be time-consuming and costly.
  • Flexibility: Wills can be easily changed or updated as long as the testator is alive and competent.

Read More: The Biggest Mistake Parents Make When Setting Up A Trust Fund

The Purpose Of A Trust vs Will

What are the differences in the purpose of a will and a trust? 

What Is The Purpose Of A Trust?

A trust is used for a variety of purposes in estate and financial planning. 

Here are some of the main purposes of a trust:

  • Avoid Probate: Trusts allow assets to bypass the probate process, facilitating a smoother and quicker transfer of assets to the beneficiaries.
  • Maintain Privacy: Trust documents are private, and the distribution of assets doesn’t become a matter of public record, unlike wills.
  • Asset Management During Incapacity: If the trustor becomes incapacitated, a named successor trustee can take over the management of the trust assets, ensuring they’re handled as per the trustor’s wishes.
  • Controlled Asset Distribution: Trusts allow the trustor to specify the terms of asset distribution, such as when and under what conditions the beneficiaries receive the assets.
  • Tax Planning: Certain types of trusts can help reduce estate taxes or gift taxes, particularly for larger estates.
  • Asset Protection: Some trusts can protect the trustor’s assets from creditors or legal judgments.
  • Long-Term Care Planning: Trusts can be a part of planning for long-term care needs, including eligibility for Medicaid or other benefits.
  • Charitable Giving: Charitable trusts are used to provide an income stream to a charity, the trustor, or other beneficiaries, often with tax benefits.

Read More: How Much Does An Estate Have To Be Worth To Go To Probate?

What Is The Purpose Of A Will?

A last will and testament serves several key purposes in estate planning:

  • Distribution of Assets: The primary purpose of a will is to outline how you want your assets and property to be distributed after your death.
  • Appointment of Executor: A will allows you to appoint an executor, who is responsible for managing and settling your estate, including paying any debts or taxes, and distributing the remaining assets according to your wishes.
  • Naming Guardians for Minor Children: If you have minor children, your will can designate who you want to serve as their legal guardian in the event of your and the other parent’s death.
  • Naming Beneficiaries: A will lets you specify who will inherit your assets. This can include family members, friends, and organizations or charities.
  • Providing Funeral Instructions: Although not legally binding, a will can include instructions for your funeral or final disposition wishes, such as burial or cremation.
  • Pets Care: You can use a will to provide for the care of any pets you have.
  • Specific Bequests: A will allows you to make specific bequests, or gifts, such as family heirlooms or keepsakes, to specific individuals.

Read More: What Is The Punishment For Taking Money From A Deceased Account?

Using A Trust And Will Together

A trust and a will can work together harmoniously to create a comprehensive estate plan. 

Here’s how they can complement each other:

  • Pour-Over Will: A pour-over will is used in conjunction with a trust. It directs that any assets not already placed in the trust at the time of your death should be transferred (“poured over”) into the trust. This ensures that all your assets will eventually be distributed according to the terms of the trust.
  • Specific Bequests: You can use a will to make specific bequests, such as family heirlooms or sentimental items, and use the trust to manage and distribute more substantial or complex assets.
  • Guardianship: If you have minor children, a will is necessary to appoint guardians for them. The trust can then manage the financial aspects for the benefit of those children until they reach an age you deem appropriate for inheriting.
  • Assets Unfit for Trust: Certain assets may not be suitable for a trust. For example, vehicles and certain types of personal property are typically better suited for a will.
  • Backup Plan: Even with a trust, having a will provides a backup plan for any assets that might have been left out of the trust. It also provides an opportunity to express wishes about the distribution of these assets.

By combining a trust and a will, you can take advantage of the benefits of both.

This provides you with greater control over your asset distribution, which:

  • protects your estate
  • ensures the well-being of your loved ones

Read More: Distribution Of Irrevocable Trust Assets To Beneficiaries

FAQs About Who Needs A Trust Instead Of A Will

Here are other questions related to who needs a trust instead of a will that our clients ask us. 

What Assets Cannot Be Placed In A Trust?

There are certain assets you generally can’t or shouldn’t transfer into a trust:

  • Retirement Accounts: You typically can’t move assets from accounts like 401(k)s, 403(b)s, and some IRAs into a trust while you’re alive. If you did, it could count as a full withdrawal and you’d need to pay income taxes. Instead, you can make the trust your account’s beneficiary when you pass away.
  • HSAs and FSAs: Health Savings Accounts and Flexible Spending Accounts are in your name only. Like certain retirement accounts, they usually can’t go into a trust.
  • Motor Vehicles: Technically, you can move a car or other vehicle into a trust. But often, it’s not worth the hassle because of insurance and registration issues. It might be simpler to pass the vehicle through your will or let intestate succession laws determine its new owner.
  • Some Stocks: You might not be able to move certain stocks into a trust. This applies if you own shares in a cooperative or have certain restricted stock.
  • Personal Items: Usually, it’s not worth adding personal items to a trust. This includes things like clothing and personal electronics. Instead, handle these items in your will.
  • Professional Practice Ownership: If you own a professional business, like a law firm or medical practice, you might not be able to add it to your trust. This is due to restrictions tied to professional licenses.

Read More: What Happens To An Irrevocable Trust When The Grantor Dies?

Does A Will Override A Trust?

No, a will does not override a trust. 

These are two separate legal documents with different functions. 

Assets that are held in a trust are governed by the terms of the trust, not the terms of your will. 

Let’s say there’s a conflict between what your will says and what your trust says.

The trust’s terms will prevail for those assets held in the trust. 

On the other hand, assets that pass through your will are subject to its terms. 

Let’s say you have both a will and a trust.

It’s important to ensure their terms are consistent and meet your overall estate planning goals.

Do I Need A Trust To Avoid Probate?

Yes, a trust can help you avoid probate. 

When you create a trust, you transfer ownership of your assets to it. 

When you pass away, these assets aren’t part of your personal estate. 

As a result, they don’t need to go through probate. 

Instead, the trust’s terms determine how to distribute them. 

This process is usually quicker, more private, and less costly than probate. 

However, any assets not included in the trust might still have to go through probate. 

That’s why many people use a pour-over will along with a trust.

This type of will directs that any assets left out of the trust at the time of death should go into the trust. 

Then they’re distributed according to the trust’s terms.

Getting A Trust And A Will

If you want help from a trust lawyer, fill out the form below. 

At The Hive Law, we understand the importance of:

  • protecting your hard-earned assets 
  • ensuring your family’s future
  • not losing everything to creditors and lawsuits
  • properly (and legally) distributing assets 

We only accommodate a limited number of clients each month.

So don’t miss your opportunity to work with our trust fund lawyers.

Benefits of our trust services:

  • Tailored solutions to fit your unique needs and goals
  • Expert guidance in navigating complex tax and legal matters
  • Preservation of your wealth for future generations
  • Streamlined asset distribution according to your wishes

Avoid the pitfalls of inadequate estate planning strategies:

  • Creditors seizing your assets
  • Lawsuits jeopardizing your family’s financial security
  • Family disputes over inheritance
  • Costly and time-consuming probate processes

Talk soon.

Get A FREE Consultation!

We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)

Share This Post With Someone Who Needs To See It