What’s the Difference Between a Will and a Trust?

When you begin your estate planning process, you begin to learn about the wide array of tools available to estate planners. As we so often tell our clients, every person is different, so every estate plan is necessarily different. The way you formulate your estate plan will depend on your personal goals, and your Boulder estate planning attorney should be able to help you figure out how to match an estate planning tool to your circumstances. Two possible estate planning tools that many of our clients consider are the will and the trust. Today, we cover some basic differences between the two, so that you can understand whether one (or both) might be right for you.

The Will

By definition, a will is a legal document. It contains an individual’s wishes and instructions for what should happen with their assets after they die. A will can include instructions for cash, bank accounts, investment accounts, real estate, personal belongings, and more. A will can also include provisions such as funeral instructions, pet care instructions, and social media account information.

The Trust

In contrast, a trust is a legal contract. In the trust, one party (the trustor) gives another party (the trustee) the right to manage and control his or her property. Each trust generally contains a purpose; that is, your trust might be set up for your children’s education, for your grandchildren’s future wellbeing, or for your charitable giving. The trustee’s job is to distribute the trust’s assets only in accordance with the trustor’s stated purpose.

Difference #1: Probate

The first major difference between the will and the trust is that if you choose to primarily use a will in your estate plan, that document will need to go through the probate process. This means that after you die, a judge will look at your will, decide if it is valid, and eventually approve the distribution of assets. This process can take time and money, and beneficiaries sometimes wait months to receive the money and property their loved one left behind.

A trust, however, is exempt from probate. If you leave assets in a trust, the trustee is solely responsible for distributing the assets; the probate court is not involved. This way, when you pass, your loved ones can receive your assets more quickly. You can also avoid having to put any document on the public record, as you might have to do in probate court. A trust therefore ensures a degree of privacy that a will cannot.

Difference #2: Varieties of Trust

A second important difference between the will and the trust is that the trust provides a diversity of options that the will does not provide. There are several major types of trust: revocable trusts, which can be changed at any time; irrevocable trusts, which cannot be changed but which offer stronger protection from third parties; and testamentary trusts, which take effect only after the trustor dies.

Trustors create trusts for reasons beyond estate planning, and trusts can be valuable tools that trustors use throughout their lifetimes as well. While we won’t go in depth today on the different ways to structure a trust, it’s important to realize that the trust is an adaptable instrument and can help trustors achieve goals well beyond passing assets to the next generation. If you want to learn more about the different kinds of trusts and how they might serve you, ask your Boulder estate planning attorney about how to set up a trust for purposes such as charitable giving, special needs planning, credit shelter, or asset protection.

Difference #3: The Cost

Although this is not always true, we often find that clients spend more money setting up a trust than they do a will. While the resources can often be well worth it in the end, some clients prefer to draft a will instead of establishing a trust, in order to spend less time and less money on their estate planning processes. At the end of the day, though, complex estates often warrant the cost of the trust, since the trust can be easily tailored to fit the needs of those with more complex assets. For purposes of estate planning, “complex” assets might include business interests, investment accounts, or a real estate portfolio.

Difference #4: The Protection

A last major difference between the will and the trust is that the trust can more easily shield your assets from judgments against you. If you are facing significant debts, the reality is that third parties can collect on these debts after you die. By securing assets in a trust, though, third parties are generally unable to access the money, leaving you with more protection and more peace of mind.

The decision of whether to use a trust or a will ultimately depends on your personal goals and assets. These differences are just a few of many, and there is always more to learn about estate planning in Colorado. Before you definitively decide on what’s right for you, we recommend you take the time to think through your options carefully and holistically.

Trusts are also more private than wills. This is because, in a will, the beneficiaries’ name, addresses, ages, and inheritance are all public record. As a result, companies can scrape the public records to obtain this information, which is often used for unsolicited marketing on other undesirable means. Simply put, a trust prevents against this misuse of information.

Speak With a Boulder Estate Planning Attorney Today

If you have questions about your estate planning process, contact the Braverman Law Group today. At the Braverman Law Group, we understand that making decisions about your estate plan is no easy matter. We take pride in our thorough approach, and we make sure every client understands the options available to them so that they can make the most informed decision possible regarding their financial future. If you want to make sure your loved ones are well set up after you are gone, you need to rely on a Boulder estate planning attorney you can trust. Our team at Braverman has years of experience navigating estate planning, probate, special needs planning, trust creation and administration, and Medicaid planning. If you want the best team of attorneys by your side, we are the group for you.

For a free, no-obligation consultation with one of our estate planning attorneys, give us a call today at (303) 800-1588. If you prefer, you can also fill out our online form to tell us about your legal issue and have one of our Boulder estate planning attorneys reach back out to you as soon as possible.