The Wealth Advisor
Wills vs. Trusts: In Plain English
Everyone has heard of wills and trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us do not – and with good reason – as they’re rooted in complicated, centuries-old law. So, if you are “fuzzy” about wills and trusts, know that you are not alone.
Wills vs. Trusts: Defined
Let’s take a minute to define both a “will” and a “trust”:
Will. A will is a written document that is signed and witnessed. A will is considered a "death" document as it only goes into effect when you die.
Trust. A trust is a legal written document that is signed and notarized. A trust 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.
The Probate Process: A Key Element in Deciding Between a Will and Trust
One key element in deciding between a will and a trust is understanding the probate process. The term “probate” – which literally means “proving” – refers to the process wherein a decedent's will must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries.
The downside is that probate can take a long time - even years - it can be expensive in many places and the entire process is public, meaning anyone can determine exactly who got what and how to contact them. In some cases, a potential upside of probate is that it can more effectively cut off creditor claims.
The Bottom Line on Wills vs. Trusts
Everyone’s situation is different, so it is important to analyze your situation – and what the future may hold – so that you can determine what is right for you.
Without an estate plan in place, you and your family are left unprotected. If you have questions about what approach is best for you, please give us a call. You do not have to make these decisions alone.
Sound Estate Planning, PLLC • 152 3rd Ave. South, Ste. 107 • Edmonds, WA 98020 • (425) 967-7287