Justin Jeppesen: Another Round of The Absolute Beginner's Guide to Answering: Will Or Trust

If you are reading this, you have heard of wills and trusts, or you are interested in learning about them. Articles written on these topics often presume that the reader knows the basics of these important documents. The reality is that the public at large does not know about these estate planning tools and their differences. So, let’s figure out “To Will or to Trust, that is your question.”

Assuming you are not an estate planning attorney, you are probably uneasy about wills and trusts. Just know that you are not alone (Hint: Even non-estate planning attorneys are unfamiliar with this stuff). After showing you the difference between these two documents, you will have a better answer to the question of “To Will or to Trust, that is your question.”

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" (or death) document as it only goes into effect when you die. 

A will provides many points of guidance, including direction:

  • for the distribution of “probatable” assets. This typically does not include assets with beneficiary designations (ie 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;
  • for allowing you the only opportunity to appoint permanent guardians for your minor children; and
  • for naming the person you wish to settle your estate, in Idaho this person is called your personal representative.

Since a will is a testamentary document and it 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 on the outset. But costs more to settle during court proceedings 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. If the trust is effective during your lifetime and you can change it, it’s referred to as a "revocable living" document.

A trust:

  • 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. In many cases, the only upside of probate is that creditor claims are cut off.

To serve as a reminder, a will guarantees probate. If you use a will as your primary estate planning tool, you own 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. Call Jeppesen Law, PLLC now 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.