You probably have heard of Wills and/or Trusts, or you are interested in learning about them. Many of the Articles I have read on these topics often presume too much knowledge of the basics of these important documents. The reality is that the public at large does not know about the differences between these estate planning tools. So, “To Will or to Trust, that is your question.”
I will assume that you are not an estate planning attorney. Because of this assumption, I will also assume you are probably uneasy with the particulars of a Will or a Trust. Just know that you are part of the majority. (Hint: Even non-estate planning attorneys are uncomfortable with this topic). After detailing some of the differences between these two documents, you will have a better answer to the question of “To Will or to Trust.”
All good explanations start with a definition. Not to assume that this is a good explanation, we will still start with defining a “Will” and “Trust”:
A Will is a written legal document that is signed by you and witnessed by others. A Will is considered a "testamentary" document, meaning its authority can only begin after you have passed away.
A Will provides guidance on a number of very important points, including direction:
for naming the person you wish to settle your estate, in Idaho this person is called your personal representative;
for the distribution of “probatable” assets. This typically does not include assets with properly filled out beneficiary designations (i.e. life insurance or retirement benefits);
for sending assets in your individual name or payable to your estate through the Probate process which gives your Will authenticity and authority; and
for allowing you the only opportunity to appoint permanent guardians for your minor children.
Since a Will is a testamentary document and does not have authority until it passes through the Probate process, you are permitted to revoke or amend your instructions during your lifetime. Additionally, the Probate process is where most of your estate and asset organization occurs, because of this a Will tends to cost less than a Trust does on the outset. But, a Will tends to cost more to settle during court proceedings (called Probate) after death.
A Trust is another legal document, which is signed by you, but it is effective during your lifetime, during any period of disability, and after death. Because the Trust is effective during your lifetime and you can change it, it’s referred to as a "living" document.
provides for the distribution of your assets on your passing, or at specified times or ages;
avoids Probate if fully funded;
provides for a successor Trustee upon your death or incapacity;
allows for the management of your property upon death or incapacity;
can address appointing disability guardians for minor children;
often includes protective Trusts for beneficiaries (ie minor children, special needs, financially immature);
permits you to revoke or amend your wishes during your lifetime; and
costs more than a simple Will on the outset but much less upon administration.
The Probate process is often a major factor in deciding between a Will or a Trust as your cornerstone estate planning document. The term “Probate” means “proving.” This refers to the process wherein a decedent's (person who passed away) Will must be authenticated by a Probate judge, the outstanding legitimate debts are paid, and then assets are fully transferred to the beneficiaries at that time.
The downside is that Probate can take a long time. In Idaho it usually takes anywhere from 6 months to a year. It can also be an expensive process, usually in the $2,000 - $5,000 range. And the entire process is completely public, meaning every nosey neighbor and predator know exactly who got what and how to contact them.
To serve as a reminder, a Will often guarantees Probate. If you use a Will as your primary estate planning tool and you own real property in your individual name, or property is made payable to your estate, Probate is guaranteed. If you use a fully-funded Trust as your estate planning tool, Probate is avoided, which can save your family time and money.
As everyone’s situation is different, it’s important to analyze every aspect of your situation, including what the future may hold, and determine what’s right for you and whether Probate avoidance, incapacity planning, and Trust protections have value to you and those you love.
Without an estate plan in place, you and your family are left completely unprotected. Request a Complimentary Initial Consultation with Jeppesen Law, PLLC, to help you determine whether a Will or a Trust makes sense for your situation. Please know that you don’t have to make these critical decisions alone. https://calendly.com/idahoestateplanning