Although they are both important estate planning tools, there’s a huge difference between a will and a trust.
What’s the Difference Between Them?
A will is a legal document that spells out how you want your affairs handled and assets distributed after you die. A trust, on the other hand, is a fiduciary relationship in which a trustor gives a trustee the right to hold title to property or assets for the benefit of a third party. Similar to a will, a trust requires you to transfer property after death to a loved one. In contrast, a living trust is revocable during the life of the trustor and passes property outside of probate court.
What’s Better, a Will, or a Trust?
From a planner’s perspective, trusts can be a fantastic choice for estate transfer. Trusts offer more control of assets, but they are more expensive, tedious to set up, and actively managed. Regardless, a trust will streamline the process of transferring an estate after you die while avoiding a lengthy and potentially costly period of probate.
If you have minor children, creating a will that names a guardian is critical to protecting both the minors and any inheritance. Wills specifically allow you to name guardianship of any minor children and share any funeral/ memorial plans or requests.
So, deciding between a will or a trust is a personal choice, but some experts recommend having both.
Do You Need Both a Trust and a Will?
Nearly everyone should have a will, but not everyone likely needs a living or irrevocable trust. If you have property and assets to place in a trust and have minor children, having both estate-planning vehicles might make sense.
How Much Does it Cost to Set Up a Trust?
The cost to set up a trust depends on various factors, including the type of trust, the state you live in, and how complex the legal document is. A simple trust done online with attorneydocs.com costs less than $300 but an estate planning attorney will most likely charge more.