When it comes to estate planning, most people think about wills first. This is because a will is the most basic document you can have in your estate plan for transferring assets and property to your heirs.
Although wills are time-tested documents for this purpose, they aren’t the only way to pass on family heirlooms and generational wealth. There’s even a way to do it without going through probate: with a trust. Once available only to the very wealthy, trusts are now in common use by people of all levels of wealth and income.
Whether a will or trust works best for you, however, depends on your unique situation. Compounding the complexity you face is the fact that estate planning has changed so much that choosing between a will and a trust for property transfer has never been more difficult.
That said, there are some important differences between wills and trusts that should be taken into account. Read through some of the key distinctions between wills and trusts below, then contact us at Aria Law PLLC to speak with a professional estate planning attorney who can provide further assistance!
When Do Wills & Trusts Take Effect?
Wills and trusts don’t go into effect at the same time. For each, there is a specific point in time when it becomes relevant. A will only takes effect once you die. Although you have signed off on how your property will transfer to your heirs, that can only happen after you’ve passed away – and probate is required to complete that transfer!
Trusts are a lot different, beginning with the fact that they take effect upon signing. This means that your trust is active during your lifetime, and can be for years or decades before you pass away. In the case of revocable living trusts, you can live off of the assets you fund into your trust. When you die, your property transfers to your named beneficiaries without undergoing probate.
What Kind of Property Do Wills & Trusts Cover?
Wills and trusts cover different kinds of property as well. For instance, a will can only cover property belonging to your personal estate. This can include your personal belongings, bank accounts, investments, real estate, and other property that isn’t co-owned by you and another person, such as a joint tenant.
Trusts only cover property transferred or “funded” into them. This is why it’s crucially important to properly title your assets and property to your trust as soon as possible. You can have a lawyer like ours at Aria Law PLLC help you with this process to reduce the likelihood of unfortunate surprises for your loved ones when it comes time to distribute your trust property.
What Does It Cost to Create a Will or Trust?
Finally, there can be a significant cost difference between wills in trusts. Before we get into that, though, keep in mind that choosing the less expensive option may provide you with a short-term benefit now, but it can lead to costlier consequences for your loved ones in the future.
Generally speaking, will-based estate plans can run anywhere between $500 to $2,000, depending upon the selected options. That price may be affordable to a lot of people, but it doesn’t take into account the cost of probate court proceedings, which are unavoidable with a will. Plus, if a will is contested, fighting the dispute can cost your loved ones even more in the end. All of this can end up costing your loved ones anywhere between $2,000 and $10,000 or more to execute your will!
Trust-based estate plans can cost between $2,500 and $4,000 upfront to establish, but you won’t need to take the cost of probate into account. For some people, this means that forming a trust might actually be the more cost-effective option in the long run.
Who Can I Turn to for Help with a Will or Trust?
Whether you wish to establish a will-based or trust-based estate plan, Aria Law PLLC can help. Our attorney can go into further detail about the differences between wills and trusts and offer personalized advice and services that take your unique qualities into account.
When you have a professional estate planning attorney there to help you create your plan for the future, you can feel more confident about achieving the outcomes you desire for your loved ones.