REFERENCE 

 

Comparing Wills and Trusts

Wills and trusts are essentially two different tools that accomplish the same goals. Deciding which tool is better for you depends on how you value the different advantages and disadvantages of each one. Whether done through a will or a living trust, the owner can choose to have the assets, or portions of the trust, remain in trust for a variety of reasons after death, such as to:

  • Provide for a spouse, sibling, elderly parents, etc.;

  • Provide basic tax planning (a credit shelter trust a.k.a. A/B trust);

  • Ensure that at the death of a spouse, any remaining assets will go to the grantor’s children, not to someone else (a QTIP trust);

  • Provide personal, tax and/or asset protection for heirs;

  • Keep assets from heirs until they reach a certain age; or

  • Provide instructions that require expenditures that perpetuate the grantor’s values (e.g., money is to be used for education, investing, etc.)

 

Section 1 shows a comparison of the advantages and disadvantages of wills and trusts.

As a planning vehicle, wills are usually easier and cheaper up front, but more effort and expense later on, while living trusts are more work and more expense up front, but usually much less work and expense later on. Wills are back-loaded, with the heirs assuming the burdens while living trusts are front-loaded, with the effort and expense up front and thus, leaving less burden on a surviving spouse, children or other heirs later. 

Deciding which tool is more appropriate depends on many factors. A choice that is more appropriate now may not be later because of different domicile, circumstances or desires. Section 2 includes some of the factors to consider when deciding between a will and a trust.

 

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