In this article we’re discussing estate planning tools, more specifically we’re looking at a will vs living trust.
This will include a direct comparison of both options, the pros and cons of each, and answers to the most common questions we receive.
This article is part of our free series on private banking and estate planning, ranging from finding the best banks in Monaco to expat wealth management, which you can click here to access right now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Will vs Living Trust
- Pros and Cons of a Will Versus a Living Trust
- Estate Planning vs Trust Assets
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
Will vs Living Trust
The main difference between a will and a living trust is that a will automatically comes into force and dictates how your assets are distributed when you die, while a living trust receives the title of any contributed assets and allows you to clearly state how, when, and to whom the assets will be distributed.
Pros and Cons of a Will Versus a Living Trust
The pros and cons of a will versus a living trust will ultimately depend on the individual considering both options, their specific objectives, asset base, dependents, and many other considerations.
That said, in most cases, the primary pros and cons of a will versus a living trust are that wills are less complex, less expensive, easier to amend, and afford additional opportunities such as outlining end of life plans and naming guardians for children.
That said, while trusts are more complex and cost more, individuals with sufficient assets to warrant a trust may prefer this option in order to avoid probate and maintain the level of privacy that a trust affords.
Pros of Wills vs Living Trusts
The main pros of wills vs living trusts is that wills allow individuals to outline their specific wishes for their end of life and to name guardians for minors dependents.
Cons of Wills vs Living Trusts
The main cons of wills vs living trusts is that wills require probate in order to distribute assets and they are available publicly. On the other hand, trusts offer privacy and are able to avoid probate when assets are being distributed.
What Comes First, Will or Trust?
Whether a will or trust comes first will depend on the type situation and how assets are being distributed via a trust. This is because trust assets can be distributed before a person dies, if the founder of the trust chooses for this to happen. However, when a person dies, a will immediately comes into force.
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Estate Planning vs Trust Assets
The main difference between estate planning and trust assets is that estate planning refers to the practice of planning how a person’s assets will be distributed after death while trust assets refer to specific assets that a person has contributed to a trust for distribution prior to and especially after their death.
In other words, estate planning is a broad term that captures all plans and strategies to assist with distributing assets, while trust assets refer to one group of assets that are considered in estate planning.
Frequently Asked Questions
Below are three of the most common questions we receive from people looking to understand a will vs living trust. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Why a Trust Is Better Than a Will?
Why a trust is better than a will ultimately depends on the individual using either option and their specific goals. While it is true that trusts allow the founder to avoid probate on their assets, in many instances individuals may not have sufficient assets (or the specific types of assets) to warrant setting up a trust for themselves and their beneficiaries.
What Are the Disadvantages of Living Trust?
The disadvantages of a living trust are primarily related to cost, this is especially true when you compare forming a trust to more basic estate planning strategies, like issuing a will. Additionally, when assets are contributed to a trust, there are tedious and time consuming steps that must be followed in order to ensure that the assets are contributed correctly.
What Are the Disadvantages of Putting Your House in a Trust?
The disadvantages of putting your house in a trust are primarily related to cost and administrative burden. In fact, in many cases it can make sense to put a house in a trust as this will allow your beneficiaries to avoid probate when you are gone. That said, if you have a mortgage on your home you may need to speak with your lender to correctly navigate the process and submit the necessary documentation prior to issuing a new deed.
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