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When deciding between a will and a trust, it’s best to have a clear understanding and know the differences between the two. A trust is a legal document where a third party or trustee is authorized to manage the assets that are held in the trust. The trustee makes sure the correct heirs gain the assets they’re entitled to. A will is a legal document that is used to outline how your assets will be distributed after your death. Both are used for the same instances. However, they are both different. Now we will take a deeper look at the details of both, allowing a clear understanding of why choosing a trust over a will is better in some circumstances.
Trusts, Wills, and Probate
Unlike trusts, wills generally have to go through a probate process. Trusts may have higher upfront costs, but you may end up saving money in the long-term process by avoiding probate and maintaining privacy. Wills, on the other hand, are easier and cheaper to make. However, they require probate, which can be expensive, and there is a lack of privacy. Here is a step-by-step of how the probate process works:
- First, prepare and open the estate.
- Next, provide notice to the creditors, heirs, and beneficiaries.
- Then, take inventory of all assets and liabilities.
- After that, pay all the estate debts and bills.
- Lastly, distribute all remaining assets and close the estate.
There’s no exact time for how long the probate process will last, but typically it ranges from 6 months to a year.
Trusts Vs. Wills
Depending on certain circumstances, it may be better to have a trust instead of a will. For instance, a trust typically provides more flexibility, and it’s ideal for people with complex estates or high-value assets. Here are a few factors that should be considered when choosing between a trust and a will:
- What the type and value of the assets are.
- What the age and capacity of the heirs are.
- How complex the estate is.
- Take a look at what the financial considerations are.
There are certain advantages to both trusts and wills. One of the biggest advantages of trusts is that they have the opportunity to avoid probate court, which can allow a faster and more private distribution of the assets. Along with that, there is more privacy when dealing with a trust as well, and there’s one place to update beneficiaries in your estate unless it’s an asset outside the trust. Examples of assets outside the trust would be life insurance or retirement accounts. When choosing a trust, there are two kinds, revocable and irrevocable trusts. A revocable trust can be changed during one’s lifetime. When dealing with an irrevocable trust, it’s much more difficult to change. Trusts have many different advantages; however, wills do as well.
Read More: The Differences Between Revocable and Irrevocable Trusts
When dealing with a will, there are a few advantages as well. Wills are simple and affordable to create; they allow you to designate a guardian for minor children and can include final wishes, such as funeral arrangements. There are many advantages to wills and trusts, but along with advantages, there are also disadvantages.
When dealing with wills, there are a few disadvantages that need to be kept in mind. First off, probate court. Probate can be costly and delay the distribution of assets. The public can also access the information about assets in your estate, which leaves you with no privacy. It’s not just wills with disadvantages; trusts have them too. For example, they are more complex and expensive to establish, they require proper funding, and you need active management to remain effective. Trusts and wills are both different and the same. Make sure you are considering all the information before deciding what to do.
Trying to Determine If A Trust Is Better in Illinois?
Many different circumstances go into choosing a trust over a will in Illinois. If you’re trying to decide what to do, reach out to Bielski Chapman, LTD. They will be able to help you make sure everything is in order when it’s the right time to start your trust.