Trusts vs. Wills, and Why You Probably Need Both
Trusts vs. Wills, and Why You Probably Need Both
Thinking about our own death is probably less fun than a root canal, but actually planning for our death? Some would take the root canal with a side of wisdom tooth extraction over that any day.
I get it. It’s not as fun to talk about estate planning as it is your latest portfolio performance report, but it is just as important. Remember, you are not doing this for yourself, you are doing it for your loved ones. They will be grieving, and trying to deal with a complicated mess during this time will add needless stress to their lives. If that wasn’t enough to convince you, think of this: having no will or trust means the court, who knows nothing about you, your values or your wishes, will be the one determining how to divvy up your assets. This is completely avoidable.
So, if you’ve been procrastinating on this crucial step, now is the time to get it done.
One of the more common questions I have heard from clients is whether a will is enough, or if they should have a trust too. A will may be sufficient in some cases, but using both together can provide a far more complete and effective plan for protecting your assets and your loved ones.
Here are three simple reasons to add a Trust to an estate plan:
- You want to avoid probate
- You want to keep your assets private
- You want more control of your assets
Probate can be expensive and time consuming. The more of your assets that can bypass probate, the more that cost and time is reduced. Trusts avoid probate, wills do not.
Do you want your nosy neighbor down the street to find out everything you have and where it’s going when you pass? Of course you don’t, but if all you have is a will, that’s exactly what could happen. Wills are public, trusts are private.
If you want to have control of your assets beyond the grave, a trust can accomplish this. For example, some may want to pass their wealth to their children, but only certain amounts at certain ages, in the hopes that the increased wisdom and maturity of age will help them to use that money more wisely.
Now you may be thinking, do I even need a Will? Wills are still useful for naming guardians for minors, naming your executor and also to outline personal wishes. Also, any assets that weren’t put into your trust would still be covered by your will.
Think of a trust like a suitcase: you pack it during your lifetime with assets—like your home, bank accounts, and investments. Once it’s packed, whoever you name as the trustee can carry it exactly where you want, even after you’re not around. That suitcase avoids probate and that suitcase remains private. A will, on the other hand, is more like a set of written instructions left on the kitchen table—it tells the court what to do with everything that wasn’t packed in the suitcase.
Final Thoughts
By combining the power of both a trust and a will, you can help ensure the people most important to you are taken care of exactly the way you want, with minimal involvement from the court, and with as much privacy and control as you desire.
There are many different types of trusts, and many offer advantages beyond what is covered in this article.
If you want some help with your financial plan, including estate planning, please reach out and we can get you started in the right direction. Shoot me an email, give me a call or fill out the contact sheet below.
Ryan Page
(720) 826-1092
Ryan.Page@LPL.com
This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.
*LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. They also provide access to Trust & Will, a program that enables clients to create self- guided legal documents.
Trust & Will is not affiliated with or endorsed by LPL Financial. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
