How to Choose Between a Will and a Trust for Your Estate Plan
Planning your estate is one of the most important steps you can take to protect your family, assets, and wishes. Two of the most common tools in estate planning are wills and trusts. While both serve to distribute your assets, they function very differently. Understanding how they work can help you make an informed decision about which option is best for your needs.
At Tefera Law Firm, PLLC, we work with our clients in Colleyville, Texas, to help them comprehend all of their estate plan options. We provide extensive legal services backed by years of experience and knowledge. Let us share some of that knowledge with you and offer a look at how to choose between a will and a trust when it comes to your estate plan.
The Difference Between a Will and a Trust
A will is a written document that states how you want your assets distributed after you die. It can also name guardians for minor children and specify final arrangements. However, a will must go through probate—a public court process that can take time and incur costs.
A trust, on the other hand, is a legal entity you create to hold and manage assets. You can choose to create a trust during your lifetime (a living trust) or through your will (a testamentary trust). Trusts can be designed to take effect while you’re alive and continue after your death, allowing for greater control over how and when assets are distributed.
How Probate Factors into Your Decision
Probate is often a key consideration in an estate plan. When a person dies with only a will, their estate typically goes through probate. This legal process validates the will, pays off debts, and distributes remaining assets according to the will's instructions.
In Texas, probate can be more streamlined than in other states, but it still adds time and court involvement. A trust can help you avoid probate altogether because assets in the trust pass directly to beneficiaries. For those who want privacy and a quicker transfer of property, a trust may be more appealing.
How to Get Started
The first step in creating an effective estate plan is to evaluate your goals. Are you primarily concerned about asset protection, privacy, or ease of administration? Do you want to provide for a loved one over time or make charitable gifts?
Cost and Maintenance Factors
Many people initially choose a will because it's easier and less expensive to create than a trust. A basic will can be drafted quickly with relatively low legal fees. However, it’s important to understand the long-term implications.
Trusts typically cost more upfront and require more effort to maintain. You need to transfer ownership of your assets into the trust, which involves title changes and recordkeeping. Still, the additional effort may result in fewer issues later on, especially if you own property in multiple states or have a high-value estate.
Privacy Considerations
One often-overlooked benefit of a trust is privacy. A will becomes a public document once it's filed with the court. That means anyone can access its contents during the probate process.
With a trust, your estate stays private. The terms of the trust and the details of asset distribution aren't public record. If maintaining confidentiality for your beneficiaries is important to you, a trust offers a significant advantage in your estate planning strategy.
Control Over Asset Distribution
Trusts offer more flexibility than wills when it comes to how and when assets are distributed. With a will, beneficiaries receive their inheritance outright once probate is complete. There is little room for conditional or delayed distributions.
Trusts allow you to set specific terms. For example, you can stagger distributions over time or set milestones like age requirements. This feature is particularly useful if you’re concerned about young heirs or want to support someone with special needs without jeopardizing their government benefits.
Choosing Based on Your Personal Circumstances
Your decision between a will and a trust should be based on your unique situation. There’s no one-size-fits-all solution in an estate plan. Below are some common factors that can help you decide which option may work better for you:
If you’re unsure where to start, consider these practical indicators:
Asset value and type: Those with substantial property, business interests, or assets in multiple states often benefit more from a trust.
Family dynamics: If you anticipate disputes among heirs, a trust can add structure and reduce the risk of legal challenges.
Privacy needs: Individuals who want to keep their estate affairs confidential often prefer a trust over a public will.
Age and health: Older individuals or those with health issues may choose a trust for its ability to manage assets during incapacity.
Desire for control: If you want to direct how funds are used after your death, a trust gives you more options than a will.
These factors don't dictate your decision, but they do highlight how personal estate planning really is. An experienced attorney can help tailor a solution to your needs.
Updating and Managing Your Plan Over Time
No matter which route you choose, both wills and trusts should be reviewed periodically. Life changes such as marriages, divorces, births, and deaths can affect how your estate plan functions. Outdated documents may fail to reflect your true intentions.
With estate planning, staying current is just as important as setting things up initially. A will is relatively easy to amend with a codicil, while updating a trust may involve more administrative work. However, the long-term benefits of a well-maintained trust can outweigh the extra effort if your circumstances are likely to change.
Recognizing How Guardianship and Incapacity Affect Your Choice
If you have children, a will allows you to name a guardian. This is one of its most important features for young families. Trusts don’t serve this function directly, though they can manage assets for minors.
Additionally, trusts offer better tools for managing your affairs if you become incapacitated. With a revocable living trust, your successor trustee can step in and manage your finances without court involvement. This makes a trust a valuable part of an estate plan approach that addresses both death and incapacity.
Tax Implications and Trust Types
Estate taxes are rarely a concern for most people, but for high-net-worth individuals, trusts offer more options for reducing tax burdens. Irrevocable trusts, for instance, can remove assets from your taxable estate. Charitable trusts and special needs trusts offer additional benefits depending on your goals.
In most basic estate planning situations, a will may be sufficient, particularly if your estate falls below federal and state tax exemption thresholds. But for those facing large estates or challenging financial arrangements, trusts offer more tools to limit tax exposure.
Comparing the Advantages
When deciding between a will and a trust, it’s helpful to compare their features side by side. Each option comes with its strengths, depending on what you value most. Here’s a quick breakdown of what each can offer:
Cost and simplicity: Wills are generally cheaper and easier to create, making them suitable for straightforward estates.
Ongoing management: Trusts require more effort to set up and fund but offer ongoing control during your lifetime and after death.
Avoiding court: Trusts keep your estate out of probate court, which can save time and legal fees.
Privacy protection: Wills become public record, while trusts remain private.
Disability planning: Trusts provide better continuity if you become incapacitated and can’t manage your own affairs.
Both tools are useful, and in many estate planning strategies, they’re used together. For example, a person might have a living trust to handle major assets and a pour-over will to catch anything not included in the trust.
Many people in Texas choose to use both documents as part of a comprehensive estate planning approach. A will can handle guardianship and personal instructions, while a trust can manage and distribute your financial legacy. Combining both tools allows for greater flexibility and protection.
Contact an Estate Planning Attorney Today
Deciding between a will and a trust is a key part of estate planning. At Tefera Law Firm, PLLC, we provide guidance for clients in Colleyville, Texas, as well as throughout Tarrant County, including Colleyville, Keller, Grapevine, Southlake, Watauga, Hurst, Euless, Bedford, North Richland Hills, Fort Worth, Arlington, and neighboring areas. Contact us for more information or advice on how to set up your estate plan.