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Wills vs Trusts

A woman holds a pink piggy bankAt some point in life, everyone needs an estate plan to ensure their assets are distributed according to their wishes after their death. This often happens as people get older, when they have children, or when they’ve seen a change in their wealth and want to see it protected. Unfortunately, less than half of Americans say they currently have a will that lays out their wishes for their money and assets.

The best way to ensure your loved ones are provided for is to create an estate plan that includes either a will or a trust. Residents of Grays Harbor County or Pacific County, including South Bend and Raymond, can take control of their financial futures by contacting William E. Morgan today.

The Importance of an Estate Plan

Estate planning is the best way to organize the distribution of assets while an individual is still living—even if they don’t feel they have a large enough estate to warrant a will or trust. Everyone should have some plan in place to look after their family and beneficiaries, and to potentially avoid the lengthy and costly process of probate. Wills and trusts are two common ways to achieve these goals, and each offers its own benefits and drawbacks.

Wills

A will is a legally binding document that stipulates what should happen with an individual’s assets after their death. It can also give guidelines on who will be the guardian of any minor children. Importantly, a will does not go into effect until after death, and has no power beforehand. There are different types of wills, but the one most commonly associated with the word “will” is a simple will. Like the name implies, these are easy to set up and don’t cost a lot. There are also testamentary trust wills, joint wills, and living wills.

Advantages of a will

  • A simple will is the easiest and cheapest option for estate planning

  • Wills can be preferable for those with very small estates

  • Wills allow for naming a guardian for any minor children

Disadvantages of a will

  • Wills only take effect after death and cannot manage assets during one’s lifetime

  • Wills still have to go through the probate process

Trusts

A trust is another estate planning document that can allocate assets and assign guardians. But, unlike a will, they can help manage assets and money while an individual is still living. There are many different types of trusts, but the most common are a revocable and irrevocable trust. A revocable trust (also called a living trust) can be altered or revoked while the grantor is still of sound mind and body. An irrevocable trust cannot be changed once signed.

Advantages of a trust

  • Most trusts do not have to go through probate

  • Trusts offer the ability to manage assets while still living

  • Trusts have more options for asset allocation than a will

  • May help reduce tax burden of beneficiaires

Disadvantages of a trust

  • More expensive to set up and maintain

  • Can be difficult to manage properties and assets once in the trust

Deciding Between a Will & a Trust

Deciding which type of estate planning tools to use is a personal decision based on an individual’s assets and the needs of their family. Those with rather small estates and only one or two beneficiaries may prefer a simple will. However, for those with larger estates and multiple beneficiaries, a trust is probably the better choice to ensure directives are carried out efficiently and to lessen the burden on heirs.

Estate Planning in Grays Harbor County

In any type of estate plan, it’s essential to have a legally binding plan in place. Even for the young and healthy, tragedy can befall us all and our families need to be protected and looked after. William E. Morgan has established a reputation for clear and knowledgeable estate planning advice in Grays Harbor County, including Montesano, Aberdeen, and Hoquiam. Reach out to an estate planning attorney today to discuss your options.