Lions, tigers and bears! Oh my! Sometimes thinking about estate planning is as scary as a pack of wild animals. Understanding wills and trusts might make one feel as if they aren’t, perhaps, in Kansas anymore, but the differences and similarities are easy to learn.
Let start small. Wills and trusts both dispose of property after death. Both are documents that dictate your wishes in written form. Wills and trusts do differ in the following ways:
- Privacy. Wills are private documents until they are entered in a probate proceeding. Probate proceedings are open to the public, and anyone can see how your estate was distributed after your death. Trusts are private documents. The public will be able to see that you have created a trust, but the public will not know the contents of the trust. Further, trusts are not entered into probate, and the distribution of assets will never be open to the public.
- Disability. A will makes no provisions for disability. A trust allows for a successor trustee to manage assets without the need for a court proceeding.
- Cost. Wills are less expansive in the short term, but heirs might incur more costs after death in probate attorney fees.
- Effort. Wills require only the effort to write one. Trusts require a little more time investment, in the transferring of assets into the trust. However, this process can (and should) be done by your trust attorney.
- Creditor protection. Neither wills nor trusts can shield their makers from creditors. Trusts can include provisions that shield its assets from heir’s creditors.