A trust and a will allow people to decide who will inherit from their estate. Despite that, a trust and a will aren’t the same kinds of legal documents, however.
These legal documents each have their unique advantages and disadvantages. Here’s what you should know:
Pros and cons of a will
A will includes more than just beneficiary inheritance. A will includes the following:
- An executor of an estate: The person who looks after your estate when you pass is called an executor. They’ll care for your assets, handle much of your legal paperwork, pay your estate’s debts, file your final taxes and supervise your asset distribution.
- Powers of attorney: If you find yourself incapacitated, you’ll likely need a power of attorney to handle any financial or medical decisions on your behalf.
- Child guardianship: Your child could be left without any form of guardianship if you and your spouse died unless this detail is included in your will.
One of the downsides to making a will is that your estate will have to go through the probate process before it’s in the hands of your beneficiaries. In other words, your heirs will have to wait several months for their inheritance.
Pros and cons of a trust
One of the major advantages of having a trust is that your heirs can avoid probate. Additionally, not only can asset decisions stay private but you may include conditions on a trust. For example, you may consider only giving some assets each month to your beneficiary or granting a beneficiary their assets only after reaching a certain age. The downside to a trust is that it can take some time to create and is more costly.
There’s often more paperwork involved in trust than a will. If you’re planning your estate, you may want to know your legal options. Wills and trusts aren’t mutually exclusive, and you may want to combine the two to your advantage.