A comprehensive estate plan involves multiple types of legal documents. Many people are curious whether they should choose a Last Will and Testament (will) or a Trust. Each option has its own advantages and disadvantages. An experienced estate planning lawyer can review your circumstances and make recommendations for the option that is most suited to your needs. Consider contacting a knowledgeable estate planning lawyer at The Law Office of Jason Carr at (214) 800-2366 and request a confidential consultation to begin the process of creating your estate plan.
What Is a Will?
A will is a legal document that directs what will happen to your property after your death. Your will outlines your property, including your real property, intangible property, and personal property. Through a will, you can potentially accomplish the following:
- Name the people you want to inherit your property
- Assign a personal representative to manage the process of administering your estate
- Name a guardian to care for your minor children
If you do not have a will, your estate may be administered by following the Texas laws of intestacy, which are the state’s default rules for how property is to be divided after a person’s death.
What Is a Trust?
A trust is a legal arrangement that provides for the management of assets within an estate. A trustee is the person who has the responsibility of managing trust property on behalf of the beneficiaries. Sometimes, the person creating the trust (the “grantor”) may initially be the trustee, and perhaps even the beneficiary. Alternatively, the grantor, trustee, and beneficiary may be different people or entities.
With a trust, a person can:
- Set the terms for how property held the trust should be managed
- Arrange for periodic distributions to beneficiaries
- Establish milestones that must be met, such as reaching a certain age or obtaining a college degree, before beneficiaries can receive distributions
- Arrange for the management of property upon a grantor’s incapacitation
There are many different types of trusts that have various purposes, such as protecting trust assets from creditors, planning for a person with special needs, or reducing estate taxes.
Advantages of a Will
There are several advantages of using a will, including:
Simplicity
In certain circumstances, a will can be drafted more easily and simply than a trust. Of course, this depends on the circumstances and needs of each individual. A will generally contains the following types of provisions:
- Identification of property
- A statement regarding the testator’s family status
- A designation of the beneficiaries who should receive the assets after the testator’s lifetime
- A nomination of fiduciaries, such as the personal representative and any guardian(s)
Cost
Because wills are shorter and more straightforward documents, they may cost much less to prepare than trusts. Also, because wills do not become effective until the maker’s death, there may not be any additional costs associated with maintaining the will.
Guardianship Designation
People can name guardians they want to care for their minor children, children with special needs, or pets in their Last Will and Testament.
Advantages of a Trust
When considering a trust vs. will, it is also important to understand the advantages of using a trust, which may include:
Greater Control
Trusts provide greater control over assets than wills. Trusts can include detailed provisions that state when beneficiaries should receive a distribution or when distributions will be made to third parties, such as schools or medical providers.
Probate Avoidance
One of the most important benefits of using a trust instead of a will is that you may be able to avoid the probate process or minimize the value of property that must go through probate, which may result in significant monetary savings. Only property that is part of your estate at the time of your death goes through probate. If property is transferred to a trust, the trust is the legal owner of the property, not the person’s estate.
Ability to Manage Property During Periods of Incapacitation
While wills only have a legal effect at the time of death, trusts generally become effective when they are created. This difference allows trusts to provide plans in case the maker becomes incapacitated. The trust can direct the trustee to pay for the grantor’s medical and other survival needs.
Tax Savings
Specialty trusts may be able to reduce your tax liability. If you have a large estate, you may owe estate tax up to 40% on the amount that exceeds the estate exclusion amount. The Internal Revenue Service reports that the estate exclusion amount is $12,920,000 per person, as of 2023.
Privacy
Wills are a matter of public record while trusts are privately administered. Wills are filed with the court and trusts are not. For these reasons, trusts provide greater privacy than wills.
Why Choose?
While you may wonder, “Should I get a will or a trust?” – you can actually have both. There can be benefits of using a will and a trust together. For example, your will may nominate guardians for your minor children while your trust may be able to provide detailed instructions on how your property should be managed. Some people create “pour-over” wills, which state that any property that the person owns at the time of death should be transferred to their trust and administered under the terms of the trust.
Whether you should use a will, trust, or both will depend on various factors, such as:
- Your family situation
- The type and value of your property
- The identity of your beneficiaries
- The age and capabilities of your beneficiaries
- Tax planning considerations
- The complexity of your needs
An experienced estate planning lawyer from The Law Office of Jason Carr can meet with you in a confidential setting to discuss your particular needs.
Contact a Knowledgeable Estate Planning Lawyer for Help
If you are still not sure of whether you should use a trust vs. a will, consider contacting an experienced estate planning lawyer at The Law Office of Jason Carr. Our dedicated Texas estate planning attorneys can discuss all of your estate planning needs and your options. We can also thoroughly evaluate the advantages and disadvantages of all your legal options so that you can make informed decisions about how to proceed with your estate plan. You can reach our legal team today by calling (214) 800-2366. We look forward to helping you create the legacy you wish to create.
