It sounds simple. A “will-based” plan uses a Will. So, a “trust-based” plan is a plan based on a trust. Nothing surprising there, so we can end this blog now, right? Actually, when you get ready to put together or update your estate planning, you’ll need to know some important differences between the two plans.
The 411 on Wills and Trusts.
Wills allow someone (the testator) to state what should be done with their stuff after they pass away. The testator also names executors or personal representatives and may make specific gifts (or bequests). If the testator has children, he or she will state who will take care of the kids if the worst happens.
A trust is another legal document involving property. The trustor signs the trust document creating the trust and naming beneficiaries. Then, the trustor transfers most if not all of their property to the trust, which is called funding the trust. People often use living trusts, a/k/a revocable trusts, and a pour-over Will. Any assets not transferred to the trust are transferred by the pour-over Will upon the testator’s death. Even though both a trust and a Will are used, this is called a trust-based plan.
Is One Better Than the Other?
Well, that depends on your goals and what concerns you the most:
- Are you concerned about maintaining privacy? Because Wills go through probate, they become public record. Anyone can access the court records, read your Will, and know your personal business. Trusts, however, do not become part of public record. Your nosy Aunt Bertha can’t run down to the courthouse and get a copy of your trust. Your Will, yes.
- Would you like a speedy, cost-effective distribution of estate assets? The will-based plan goes through probate before distributing the testator’s estate assets to their beneficiaries. Most of the time, however, trust-based plans transfer estate assets to heirs more quickly, primarily because the assets don’t pass through the court system first.
- Do you need asset protection? A will only distributes assets, it does not protect them. On the other hand, a trust provides asset protection on several levels, depending on the type of trust chosen.
- Are you more concerned with at upfront costs or long-term? Establishing and funding a trust typically costs more than writing a Will. With a trust, though, the estate assets usually avoid probate. This eliminates the court costs and legal fees associated with probate.
Talk to Us About Your Estate Plans.
Ask about trust-based and will-based plans next time you speak with your estate planning attorney.
Contact the attorneys at the Dillon Law Group, PLC with your questions and concerns. We give our clients the personalized attention they deserve. Call us at 757-962-4796 to schedule an appointment or use our Contact Form to let us know you’re interested. We assist clients in Virginia Beach, Newport News, and surrounding areas.