If you’re considering estate planning, you might wonder whether you should have a Will or a Trust. Both documents serve similar purposes but have different features and benefits. In this article, we’ll discuss the differences between Wills and Trusts and help you determine which option is best for your needs.
What is a Will?
A Will is a legal document that outlines how you want your assets to be distributed after you pass away. It also designates an Executor (also known as a Personal Representative in Florida) who will manage your affairs and ensure that your wishes are carried out. A Will only takes effect after you die and must go through the probate process, which can be extremely time-consuming and costly here in Florida.
Example: George dies with only a simple Will. He has substantial investment assets and an expensive homestead. None of his assets have beneficiaries designated.
Result: George’s family must probate his Simple Will here in Florida. The probate will likely take anywhere from eight months to a year (or longer) and will cost George’s family thousands of dollars in attorney and court fees.
A Will also does not provide you any protections during your lifetime. If you’re incapacitated, a Will does not allow for your loved ones to step in and make financial or health care decisions on your behalf.
What is a Trust?
A Trust is a legal entity you create to hold and manage your assets during your lifetime. It designates a trustee who is responsible for managing the assets in the Trust and distributing them according to your wishes. A Trust can provide more flexibility and control over managing and distributing your assets than a Will.
A Trust can also help you avoid probate since anything titled in the name of the Trust will not go through the probate court system.
Example: George created a Revocable Living Trust and placed his investment assets and his homestead into the Trust. Because all of George’s assets were titled in the name of his Trust, George’s family will not have to go through the costly and time-consuming probate process.
Trusts are very commonly used here in Florida. The most common type of Florida trust is the Revocable Living Trust. The Revocable Living Trust provides maximum flexibility for the individual creating the Trust since the individual creating the Trust will often be the Trustee. Additionally, the Revocable Living Trust is Revocable. Revocable means that the creator of the Trust can change or get rid of the Trust whenever they want to if they have the proper capacity.
Should I have a Will or a Trust?
Deciding whether to create a Will or a Trust depends on your individual circumstances and estate planning goals. Here are a few factors to consider:
1- Size and complexity of your estate
If you have a large and complex estate, a Trust may be a better option. Trusts can provide more control and flexibility over how your assets are managed and distributed, which can be especially beneficial if you have a blended family, a business, or assets in multiple states or countries.
Trusts may also be a good option for smaller and less complex estates since the cost of Probate in Florida often far exceeds the price of a Trust. Also, if you have beneficiaries that are special needs, spendthrifts, or have creditor issues, then a Trust will be a great option to protect your beneficiaries after you pass.
Trusts are also a great way to protect yourself if you become incapacitated. You can dictate within the Trust how you want your assets to be distributed and used to care for yourself upon incapacity. And the successor Trustee that you name will have to honor your wishes.
2- Privacy concerns
A Will becomes a public record when it goes through the probate process, as every Will in Florida must be filed with the courts within ten days after someone dies. Anyone can access a Will once it is filed with the probate court here in Florida. A Trust is not filed with the probate court and is not a matter of public record. Trusts are fantastic options if you would like to maintain privacy for yourself and your loved ones after you pass away.
3- Cost
Trusts are often more expensive to create and maintain than Wills. The cost may be worth it if a Trust can help you save on probate expenses or provide other significant benefits.
4- Flexibility and control
Trusts can provide more flexibility and control over managing and distributing your assets. If you want more say over how your assets are handled after you pass away, a Trust may be a better option.
Conclusion
Both Wills and Trusts can help you to distribute your assets and determine how your affairs should be managed after you pass away. Deciding which option is best depends on your circumstances and estate planning goals. It’s always a good idea to consult with an experienced estate planning attorney to determine the best course of action for your particular situation.