Wills vs. Trusts: Which is Best for Your Utah Estate Plan?
Wills vs. Trusts: Which is Best for Your Utah Estate Plan?
When preparing for what happens after death, you often hear people talk about needing a “Will” or a “Trust.” But what really are these and, most importantly, how do you know which one you need? If you’re a homeowner or parent in Utah, understanding the difference between a will and a trust is an important step in planning for your family’s experience after you die.
As an Utah attorney whose focus is on guiding families through the complexities of estate planning, I understand that choosing between a will and a trust can feel overwhelming. In this blog, I’ll break down the essential differences between wills and trusts to give you the information you need so you can decide which will help you the most.
What is a Will?
A will is a legal document that spells out how your assets will be distributed after your death. It’s also the document where you can appoint guardians for minor children. Wills are relatively straightforward and can be inexpensive to create, making them a popular choice for many families. However, there are some not commonly known cons to wills that surprise many unsuspecting will users.
Pros of a will:
- Simple to create: Wills are typically less complex and easier to create than trusts.
- Appoint guardians: A will can designate guardians for minor children.
- Cost-effective: A will generally has a lower upfront cost, making a more affordable option for estate planning.
However, while the simplicity of a will can be appealing, it also comes with a significant drawback: probate. Probate is the legal process where the court supervises the administration of your will- for most this means the court overseas the distribution of your assets after you pass away. The process can be time-consuming, expensive, and, because it’s court-supervised, it becomes public record and therefore is available to the public. For families who want to avoid the stress and cost of probate, or who want to keep their affairs private, these are critical considerations.
Cons of a will:
- Guaranteed probate: Where there is a will- there is probate. This means that the court will oversee the administration of your will and distribution of your assets.
- Public: Probate court records are generally public. So once your will has been filed with the court, it becomes public.
- Time consuming: It can take months to years to get through the probate process.
- Expensive: While you may have saved a little upfront doing a will, the probate process can be expensive and generally cost them more in the long run.
What is a Trust?
A trust, is not just a document like a will, it is a legal arrangement or agreement, where your assets are held by a trustee for the benefit of your beneficiaries. There are several types of trusts, but the most common for estate planning purposes is the revocable trust. Often when you create a revocable trust, you are the initial trustee and you are the initial beneficiary. Then you specify who you want to follow in your place when you no longer hold one or either of these roles. This type of trust allows you to maintain control over your assets during your lifetime, while specifying how and when those assets should be distributed after your death. Because you can specify how and when assets should be distributed after your death in a trust, they are a way to build and pass on your legacy and values.
Pros of a trust:
- Avoids probate: One of the most significant benefits of a trust is that it helps your estate avoid the lengthy and costly probate process. Trust assets can be distributed privately and efficiently.
- Greater control: With a trust, you can control when and how your assets are distributed. For example, you can stipulate that beneficiaries receive funds at certain ages or milestones.
- Protection if you become incapacitated: Unlike a will, a trust can provide instructions for managing your assets if you become unable to make decisions for yourself.
However, creating and maintaining a trust requires more effort. You must “fund” the trust by transferring ownership of assets like real estate, bank accounts, and investments into the trust’s name. This process can take more time than setting up a will and requires additional attention.
Cons of a trust:
- Higher initial investment: Compared to a will, trusts usually have a higher initial cost. However, by avoiding probate, they can save a lot more than they cost.
- Easier to do wrong: Because they are more complex, they can be harder to get right. Rather than just buy generic documents, it’s important to make sure you have expert counsel and guidance, so your trust is customized to you.
- More effort: Unlike a will, which doesn’t manage any assets, a trust needs to be “funded” and the trust either needs to be named as the beneficiary of assets or they need to be transferred into the trust.
Will or Trust – Which is Better for You?
When deciding between a will and a trust, it’s essential to assess your individual needs and goals. Utah estate planning isn’t one-size-fits-all, and the right solution for you depends on your family dynamics, your assets, and how you want your estate to be handled.
For example, if your estate is relatively small and you don‘t own any real estate, or you don’t care about avoiding probate, a will may be a good fit. If on the other hand, if you want to minimize the burden of probate, ensure privacy, or have more control over your estate’s distribution, a trust may be the better choice.
Can You Have Both a Will and a Trust?
Yes! In fact, if you have a trust-based estate plan, it should include a Pour-Over Will. A Pour-Over Will is just a fancy name for a will that is designed to have any assets not already transferred to the trust “pour over” into the trust upon your death. This ensures that everything is handled according to your wishes and minimizes the risk of leaving assets out of your estate plan.
Additionally, for families with minor children it is important to have both a will and a trust as part of their Utah estate plan. Here’s how they work together:
- Trusts handle the distribution of assets placed in the trust and allow you to avoid probate. And you choose who manages these assets for minor children until they are old enough to manage them themselves.
- Wills would push any assets not included in the trust into the trust (if any) and also appoint guardians for minor children.
Do Wills Require Probate?
Yes, wills typically require probate. After your death, your will must go through a court process to validate its contents, settle debts, and distribute assets. The probate process can take months or even years, and it can incur significant court fees, attorney and other professional fees, and other costs. And, as stated earlier, probate proceedings are public, meaning the details of your estate become available to anyone who cares to look.
On the other hand, trusts can bypass probate entirely, ensuring a quicker and more private distribution of assets. This is one of the primary reasons many people in Utah opt for a trust as part of their estate planning.
When Do Trusts and Wills Go into Effect?
Here’s another key difference between wills and trusts:
- Wills only go into effect after you pass away. At that point, someone must notify the court to begin the probate process. If you become incapacitated before your death, your will does not help provide instructions for handling your affairs.
- Trusts take effect immediately upon signing and funding. This means that a trust can be used to manage your assets if you become incapacitated and unable to make decisions for yourself. In addition, it helps ensure that your wishes are carried out both during your lifetime and after your death.
Why Estate Planning is Crucial in Utah
Planning for your future is one of the most important gifts you can give your loved ones. Whether you choose a will-based estate plan or a trust-based estate plan, having a comprehensive plan in place helps ensure that your wishes are followed and that your family is protected from unnecessary stress and legal hurdles.
As an Utah estate attorney, I’m here to guide you through the process of creating an estate plan that works for you and your family. If you’re ready to take the next step in securing your future and protecting your assets, book a free consultation.
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I'm Marne!
I help homeowners and parents think and plan ahead so they have peace of mind and confidence.