Sarah and Tom had always been responsible with their finances. They saved diligently, paid off their mortgage early, and even drafted a will shortly after
their second child was born. They believed they had done everything necessary to ensure a smooth transition of assets should something happen to one of them. But when Tom suddenly passed away in a car accident, Sarah was blindsided by the complexity and costs of the probate process.
Tom’s will had been written with the best of intentions—he had named Sarah as the primary beneficiary and their children as secondary beneficiaries. But what they hadn’t anticipated was the long, drawn-out legal process that followed. Probate court required months of hearings, costly legal fees, and public disclosure of their assets before Sarah could gain full control over what Tom had left behind. In the meantime, certain accounts were frozen, and Sarah had to scramble to cover everyday expenses.
The experience made her wonder—was there a better way?
Understanding the Differences: Wills vs. Trusts
What is a Will?
A will is a legal document that outlines your wishes regarding asset distribution, guardianship of minor children, and your choice of executor. It is one of the most basic estate planning tools, but it comes with limitations that many people overlook.
- Wills must go through probate. This is the legal process of validating the will in court, which can take months or even years depending on the complexity of the estate.
- Probate is public. This means anyone can access the details of your estate, including nosy neighbors or potential scammers.
- A will does not help with incapacity. If you become incapacitated before passing away, your will does nothing to manage your assets or finances.
What is a Trust?
A trust, on the other hand, allows you to place your assets under the management of a trustee, who is responsible for distributing them according to your wishes. Unlike a will, a trust:
- Avoids probate entirely, allowing beneficiaries to receive their inheritance quickly.
- Provides privacy, as trusts do not go through the public court system.
- Can specify conditions for inheritance, which is especially useful for minor children or beneficiaries who may not be financially responsible.
- Can provide for you during your lifetime, in case of illness or incapacity.
Which One is Right for You?
The choice between a will and a trust depends on your specific needs and goals. If you have few assets and want a simple, straightforward way to pass them on, a will may be sufficient. However, if you want to avoid probate, protect your privacy, and ensure your assets are distributed exactly as you wish, a trust is often the better choice.
Sarah learned this lesson the hard way. After struggling through probate, she decided to set up a trust for her children, ensuring that they wouldn’t face the same hurdles when she passed. You don’t have to wait for a crisis to make the right decision—schedule a consultation with Raulston & Associates today.