Top Three Differences Between a Will and a Trust!

A will and a trust are two of the most common tools for transferring wealth transfer after death. Most people are familiar with a will. They’re quick, easy, and important to set up, but far less people are knowledgeable about trusts or why they likely are a better estate planning solution in most cases. Here are three key differences you should know as you begin the estate planning process:

1) Wills don’t enable you to avoid probate

Probate is the court supervised process of transferring assets after you pass away. Some people describe it as a “lawsuit against yourself.” It’s generally inefficient, expensive, and public (more about the process in Arizona here) and almost all of our clients want to avoid it. Most people think that by creating a will they can avoid this process but unfortunately that’s not true. Rather, a will needs to be submitted to the court and the judge or clerk would approve its validity and continue to supervise the process.

Assets inside of a trust, on the other hand, will avoid probate on death and can be transferred efficiently to your beneficiaries.

2) Wills usually don’t control most of your assets

Another important limitation of wills is that they actually don’t control how most of a person’s assets are distributed upon death. That’s because a lot of assets will pass automatically to the named beneficiaries (e.g., retirement accounts, life insurance policies etc.) or joint-owner (e.g., a jointly titled home or bank account, etc). regardless of what your will states.

While these transfers are probate free and are thus generally efficient, they may differ what you’ve stated in your will and don’t allow you to structure inheritance intelligently the same way you can in a trust by taking into consideration each beneficiary’s maturity, financial condition, and unique circumstances.

3) Wills don’t help you in the event of incapacity

Finally, wills don’t go into effect until death, so in the event of incapacity, they don’t help you at all. And since people don’t generally tend to die suddenly, this is becoming an increasingly important component of estate planning. Thus, absent a valid power of attorney, your loved ones would need to initiate an expensive court proceeding to gain control of your assets when you are unable to do so.

Contrast that to a properly funded living trust (more about that here) in which your successor trustee can step into your shoes immediately during incapacity and manage your financial assets.

If you’d like more information about whether a will or trust is better for you, contact the Arizona estate planning attorneys at Yaser Ali Law today to set up a short complimentary consultation.