Did you know that 46% of adults in the U.S. say they have a will that tells people how they want their money and property to be treated after they die? Statistics show that in 2021, 75% of end-of-life plans were wills, and only 18% were trusts. Many neglect their estate planning for different personal reasons, but this can have legal and financial consequences for them and their families in the future.
When learning about estate planning, it’s important to compare the pros and cons of trusts and wills. Depending on the situation, each has its own benefits. A key consideration often arises: how much does an estate have to be worth to go through probate? While this threshold varies by jurisdiction, looking at the benefits of trusts can help you see why they might be better in many cases.
A survey by Caring.com can give you some insight into this. The survey shows that people who used trusts were more satisfied with their estate planning outcomes compared to those who relied solely on wills. From protecting your wealth to maintaining privacy, a trust can offer you advantages that a will couldn’t.
Learn the five key ways in which a trust could be the superior choice for your estate planning needs.
Asset Protection
When it comes to asset protection, is a trust better than a will? Compared to wills, trusts provide a better level of protection since they can shield your assets from various risks, such as creditors, lawsuits, and even divorce settlements. By placing your assets in a trust, you can make sure that they’re managed and distributed according to your wishes, while also providing a level of protection against future threats.
The confidentiality that trusts provide is one of their fundamental advantages. Unlike wills, which become public records upon probate, trusts allow your assets and beneficiaries to remain private. This can be particularly beneficial if you have concerns about privacy or if you want to protect your beneficiaries from unwanted attention.
Trusts also offer more control over how and when your assets are distributed. You can set specific conditions for distributions, such as reaching a certain age or meeting certain milestones, so your assets will be managed responsibly and in line with your intentions.
Avoiding Probate
Instead of depending only on a will to distribute your assets, consider creating a trust to avoid the probate process and speed up the process. The process of having a court oversee the distribution of your assets in accordance with your will can be lengthy and expensive. This is known as probate. By setting up a trust, you can make sure that your assets are transferred to your beneficiaries without the need for probate. This can save time and money, as the trust assets can be distributed according to your wishes without court involvement.
Avoiding probate through a trust also provides greater privacy. Wills are public documents once they go through probate, meaning anyone can access information about your assets and beneficiaries. With a trust, your estate plan remains private, offering confidentiality to your beneficiaries and shielding your financial affairs from public scrutiny.
Privacy and Confidentiality
Unlike wills, trusts aren’t generally made public during the probate process, providing a level of privacy for your assets and wishes. Wills become public records once filed with the court, allowing anyone to access details about your estate and beneficiaries.
Choosing to use a trust will allow you to protect your estate plan from prying eyes and possible legal disputes by keeping private any critical information. This confidentiality can be particularly advantageous if you prefer to keep the distribution of your assets discreet or if you have complex family dynamics that could lead to conflicts. With trust, you can rest assured that your affairs will be handled privately and that your wishes will be carried out without unnecessary external interference.
Control Over Distribution
Maintaining control over the distribution of your assets is a key advantage of setting up a trust rather than relying solely on a will. With a trust, you can specify precise instructions for how and when your assets are distributed to your beneficiaries. This level of control allows you to consider factors such as the age, maturity, and financial responsibility of your beneficiaries before they receive their inheritance. Unlike a will, which becomes public record upon your passing, a trust offers privacy in the distribution of your assets, keeping your wishes confidential.
A trust also gives you the option to appoint a trustee who’ll oversee the distribution process according to your instructions. This guarantees that your assets are managed and distributed in a manner that aligns with your wishes, even after you’re no longer able to make decisions. By setting up a trust, you can have peace of mind knowing that your assets will be distributed according to your specific wishes and instructions.
Flexibility in Estate Planning
When setting up a trust in your estate planning, you gain significant flexibility in determining how your assets will be managed and distributed. Unlike wills, trusts provide various options for controlling the distribution of your assets. With a trust, you can establish specific conditions that must be met before beneficiaries receive their inheritance. You can, for instance, set age benchmarks, educational requirements, or even staggered distributions over time.
The option to appoint a trustee, someone who’ll be responsible for managing and distributing the assets according to your instructions, makes sure your wishes are carried out effectively and helps prevent any potential disputes among heirs.
It can also be more adaptable in response to changes in your circumstances. If necessary, you can modify the terms of the trust, giving you a level of flexibility that may not be easily achievable with a will. With this kind of flexibility, you can make sure that your estate plan stays current and reflective of your current situation and desires.
Conclusion
Keep in mind these main benefits of a trust the next time you’re choosing between one and a will: asset protection, avoiding probate, privacy and confidentiality, control over distribution, and flexibility in estate planning.
A trust offers you more control, protection, and privacy over your assets and wishes. It’s a wise decision to guarantee that your estate is managed in the manner of your choosing.
