July 3rd, 2024
Law book about wills and trusts on the desk.

Wills and trusts are both essential estate planning tools that can be used to ensure your wishes are carried out after your passing. However, they are used to accomplish different objectives — and it’s important to know whether a will vs. trust is best for you. You can also choose to create an estate plan that uses both tools to provide additional protections.

What is a Will?

A last will and testament is a document that is used in estate planning to direct the distribution of assets to your chosen beneficiaries. In addition to providing instructions for the appointment of an executor and making sure that the administration of your estate runs smoothly, a will can also designate a guardian for your minor children. Although a will does not avoid the public probate process, it can help minimize the potential for disputes among your loved ones by communicating your wishes clearly.

What is a Trust?

Creating a trust is often more complicated than drafting a will. However, trusts can come with some added protections and benefits, including greater control over the timing of the distribution of your assets. These tools come in many different forms — they can allow you to give your assets to your loved ones when you pass away, address tax concerns, provide protection against creditors, and give to a charitable organization you believe in.

There are two main types of trusts: revocable and irrevocable trusts. Also referred to as living trusts, revocable trusts can be modified any time after they are created because you are still able to manage the assets. Revocable trusts can accomplish many of the same goals as a will, while avoiding the probate process. But while they can also help to plan for incapacity, it’s crucial to understand that revocable trusts do not offer any tax advantages or asset protection.

Unlike revocable trusts, irrevocable trusts cannot be changed or amended once they have been created. They are managed by a trustee who is not the grantor. These types of trusts can help reduce estate taxes, safeguard assets from creditors and lawsuits, and plan for Medicaid eligibility.

What are the Differences Between a Will vs. Trust?

People create wills and trusts for various reasons. While wills and trusts perform similar functions, they are distinctly different when it comes to their structure, purpose, and how they take effect. Significantly, a trust can be used to plan for incapacity, while a will is only effective upon death. Some of the other major differences to note between a will and trust include the following:

  • Probate — A last will and testament must go through the court-supervised probate process before your property can be distributed. This process can often be lengthy and costly for your loved ones. However, certain trusts can avoid probate entirely and allow your beneficiaries to receive their inheritances more quickly.
  • Timing — A last will and testament only becomes effective after your passing. In contrast, a trust can become effective as soon as it is funded, depending on how it is set up. With a trust, you can also control the timing of when your beneficiaries would receive their inheritance, whether it be once they have reached a certain age or milestone.
  • Privacy — While a will becomes part of the public record, a trust can allow your financial affairs to remain private. The contents of a trust stay between the grantor, the trustee, and the beneficiaries.
  • Maintenance requirements — A living trust would have to be updated every time a new asset is acquired in order to transfer it into the trust. A will should be reviewed from time to time and updated when major life events occur.

One mechanism is not necessarily better than the other. Whether you use a will vs. a trust will depend on your specific needs and goals — even though living trusts are very popular, you may decide you only need a will if you have a modest estate. However, depending on your objectives, you can use both a will and various types of trusts in your estate plan. You can also use a “pour-over” will to fund a trust with any assets that were not placed in a trust prior to your passing.

Contact an Experienced New Hampshire Estate Planning Attorney

If you are wondering whether a will vs. trust is right for your situation, it’s best to consult with a knowledgeable estate planning attorney. At Beaton & Kiers, our estate planning attorneys take the time to get to know you and understand your goals. We can assist you with creating a tailored estate plan that will help ensure your wishes are met — whether it includes a will, trust, or both. To learn more about our estate planning services, contact us at 603-238-6690 to schedule a consultation.