What’s the difference between a will and a trust?
Wills and trusts both serve as directions for your loved ones after you die. But a will is like printed MapQuest directions and a trust is like a GPS.
Do you remember when you printed MapQuest directions before a road trip? This was much more convenient than stopping along the way to ask for directions. And you could be confident that you would reach your intended destination. But what if there was construction? Or a wreck? Or you wanted to make a slight detour? Those printed directions could not accommodate the change of plans; they could only keep you on track to your original destination. And if you're driving somewhere you've never been before, it's a whole lot better to have those paper directions than no directions.
On the other hand, a GPS can account for changes in traffic patterns or find the nearest Chick-fil-a. Moreover, it can be updated immediately in case your destination changes or if you want to take a scenic detour. But, as you could probably guess, a GPS is more expensive than printed directions because of the service it offers.
Whether you need a will or a trust (or both) depends on your goals and family dynamics. To paraphrase the Cheshire Cat in Alice's Adventures in Wonderland, if you don't know where you're going, any path will get you there.
A will is a legal document that says how you want your property divided after you pass away. Without any additional “estate planning,” a will is required to be “probated”—taken to court—to become effective. However, there are several ways to avoid probate (like adding beneficiaries to your bank account and car).
A trust is a legal arrangement where you transfer ownership of your assets to a trustee, who manages them according to your instructions. Trusts offer privacy and can avoid probate, allowing your assets to be distributed quickly and without court involvement. Trusts also give you control over how and when your assets are distributed. For example, you can specify that a grandchild receives their inheritance at a certain age.
The right choice depends on your needs. If you have a straightforward estate (and everyone has an “estate”), a will may be sufficient along with other legal documents (like a “Lady Bird Deed”). If you value privacy, want your family to avoid the Medicaid Estate Recovery Program, or want to plan for the next generation, a trust might be better. Many Texans use both a will and a trust for complete protection.
As always, this is not legal advice. Got a question about wills or trusts? Call us at (940) 264-3041 or visit us at Watson Law Firm, 300 N. Wall Street, Iowa Park, Texas.
