Wills vs. Trusts – Explaining the Estate Planning Enigma
February 6, 2007
Many people believe that they should establish a Revocable Trust in order to facilitate the administration of their estate upon their passing. In many cases, a Will, or Will substitutes, such as joint ownership and beneficiary designations, will accomplish the same goals as a Trust thereby making a Trust unnecessary. In order to determine whether a Trust is right for you, it is important to understand the difference between a Will and a Trust.
Both Wills and Trusts are devices that you can use to provide for the distribution of your estate upon your death. A Will is a document that gives instructions to the Executor of your estate as to the distribution of the assets in your probate estate. The assets in a probate estate include those assets that are held in the decedent’s name alone that do not have a beneficiary designated. In order for a Will to “speak,” a probate estate must be opened. When the decedent has a Will, probate, somewhat simplified, is a state court proceeding in which your Will is proven, your debts are paid and your remaining property is transferred to your heirs as directed in your Will. The negative aspects associated with probate are (1) expense – probate will generally cost approximately 3-4% of the value of the probate assets; (b) time – probate takes at least one year to complete, but the process may span several years; and (c) burden on family members – probate will generally require substantial administrative work from your family members.
A Revocable Trust is a written declaration and contract in which you state that you are transferring your property…
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by: Gina M. Barry, Esquire