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Do You Need A Will Or A Trust?



The reasons to have a will or a trust are plentiful. Having a will or trust permits decedents to make decisions as to who will be recipients of their property, rather than reverting to state laws. Many people incorrectly assume that they must be old or rich to make an estate plan. Yet, home ownership, parenthood, car ownership or even bank account ownership are sufficient motivators to create an estate plan. A house, car or bank account constitutes an estate. Some estate planning attorneys opine that it is those with smaller estates who are in the greatest need for estate plans to ensure their property is appropriately distributed and transferred at death.

Will vs. Trust?

Wills and trusts are two approaches as to how to create an estate plan. They are both used to transfer a decedent's property following his death. It is prudent to consult with an estate planning attorney to determine which vehicle is preferable.

Wills

Wills allow the decedent to select a personal representative. They permit the decedent to remove the costs associated with a bond of a personal representative that is required in probate court if the estate must be probated. If a person does not have a will, the court will appoint a personal representative. That court-designated representative might be a party other than the one whom the decedent would have preferred.

The costs associated with preparation of a will are lower than the costs to prepare trusts. Wills require no further action by a decedent after being executed, so they are slightly simpler to maintain, with accompanying lower expense. It is possible to insert provisions in a will for the creation of a trust. The type of will sufficient to accomplish such a purpose is not a simple will and it costs more.

Trusts

Trusts allow a decedent to circumvent the probate court entirely (provided the decedent creates the trust properly and funds it appropriately). For decedents with minor children, they can name the guardian they prefer in a trust (or a will). If there is no trust or will, the court has the right to make an appointment of a guardian. The court-appointed guardian may not be the party that the decedent would select.

A revocable trust is a more complicated tool than a will. The trust requires management of a decedent's estate property during the decedent's life and that property's distribution after the decedent's death. A trust is required to be funded during a decedent's lifetime. Because of that requirement, a trust may involve a great deal of paperwork and administrative effort.