Wills v. Trusts: What’s The Difference?

When building an estate plan, people are often confused about whether they need a will or a trust. They often believe that a trust is only for the wealthy class, but that is simply not true. Deciding whether to establish a will or trust depends on each person’s needs, not the value of an estate. They are both legal tools used in estate planning, but they serve different purposes. So, let’s talk about will v. trust and the difference between them.

Definitions

Deciding on the benefits of a will v. trust can be an important step in your estate plan. But before we get too far, let’s first review some definitions.

Estate Plan

An estate plan is a group of legal documents put into place to take care of you when you cannot, and how you want to take care of your loved ones after you are gone. An estate plan may include the following:

• A will or trust
• Healthcare directive
• Power of attorney
• Life insurance
• Retirement accounts
• Investment accounts

The documents and plans must all work together to build a strong estate plan. It is best to update your estate plan every 3-5 years or when you have a life-changing event such as a marriage, divorce, or moving to a new state.

A Will

A will is a legal document that states how you want your assets distributed after your death. It is also where you name the legal guardian of your minor children.

A Trust

A trust is a legal contract allowing you to transfer your assets to an account you or another trustee can manage. It is a way to manage your assets while you are still alive and transfer them after your death.

Will v. Trust: What Is The Difference?

The definitions above give you an idea of the difference between a will and a trust, but it is more involved. A will is relatively straightforward and ideal for asset distribution and personal wishes upon death. However, a trust offers more control over your assets while you are still living. Various types of trusts allow you to utilize your assets in the best possible manner.

A will takes effect after you pass away, while a trust is more flexible and can be used while you are living. Then, assets can be transferred after you pass away. Each has benefits, and it depends on your unique situation as to which will work better for you.

Benefits of a Will

• A will is straightforward, allows you to name an executor, and takes effect when you die
• You can name a guardian for your minor children in a will
• Easier and less expensive to establish and update

Benefits of a Trust

• More flexible – there are various types of trust to choose from
• Tax benefits, since the trust holds your assets and not you personally
• It does not go through probate court – which can be lengthy and costly

Work With An Oak Brook Estate Planning Attorney

Deciding to establish an estate plan is a huge accomplishment. Now, you must review will v. trust and determine what is right for you. An experienced estate planning attorney can listen to your goals and help you make the best choice.

An Illinois estate planning lawyer can help you decide between a will or a trust. Consulting an experienced attorney in the Chicago area can give you protection and peace of mind. Contact the Estate & Probate Legal Group at 630-864-5835. 

Areas We Serve:  Cook, DuPage, Kane, Lake, Kendall and Will counties.