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What are the advantages and disadvantages of a trust compared to a will?

What are the advantages and disadvantages of a trust compared to a will?

Full question:

What is the advantage/disadvantage of a trust over the traditional will? My wife is living and we are the biological parents of three living adult children. Please provide comprehensive reply to my question. That is, why I would want a trust vs. will.

Category: Trusts
Date: 04/07/2025
State: Washington

Answer:

A trust offers several advantages over a traditional will. It can help reduce or avoid taxes, manage assets during your lifetime, protect wealth, and ensure smooth transitions for family businesses or charitable donations. Trusts can also avoid the delays and costs associated with probate. They allow you to provide for beneficiaries who may need assistance managing their affairs, such as young children or dependents.

Trusts offer flexibility in how assets are distributed, allowing you to retain wealth in a single fund and control how and when beneficiaries receive their inheritance. For example, a revocable living trust can be changed or revoked while you are alive, and it helps avoid probate if assets are transferred to the trust before your death.

In contrast, a will only takes effect after your death and does not manage your assets while you are alive. A testamentary trust, which is created through a will, only comes into play after your death and does not address asset management during your lifetime.

Trusts are also generally private, keeping details about your assets and beneficiaries out of the public record, unlike wills, which become public documents. Additionally, trusts can provide for various needs, such as caring for minor children, supporting a second spouse, or managing family businesses.

However, trusts can be more complex and costly to set up than wills. It's essential to consider your specific situation and goals when deciding between a trust and a will.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What are the negatives to a trust vs will?

One of the main disadvantages of a trust compared to a will is the complexity and cost of setting it up. Trusts often require more legal assistance and can involve ongoing management. Additionally, if you do not properly fund the trust with your assets during your lifetime, it may not serve its intended purpose. Unlike wills, which become effective immediately upon death, trusts require maintenance and may need to be updated regularly. Finally, some people may find the privacy of trusts appealing, but this can also mean less oversight compared to the public nature of wills.

What does Suze Orman say about trusts?

Suze Orman emphasizes the importance of trusts in estate planning, particularly for those with complex family situations or significant assets. She often highlights how trusts can help avoid probate, provide privacy, and allow for more control over asset distribution. Orman advocates for revocable living trusts as a way to manage assets during one's lifetime and ensure a smoother transition for beneficiaries. Her advice generally encourages people to consider their unique circumstances when deciding between a trust and a will.

Why would someone use a trust instead of a will?

Someone might choose a trust over a will to avoid probate, which can be time-consuming and costly. Trusts allow for the management of assets during the grantor's lifetime, providing more control over how and when beneficiaries receive their inheritance. They can also offer privacy since trusts do not become public records like wills do. Additionally, trusts can be beneficial for individuals with minor children or dependents who may need ongoing financial support or management.

What are the disadvantages of a family trust?

The disadvantages of a family trust include higher initial setup costs and complexity compared to a will. Maintaining a trust may require ongoing legal and administrative work, which can be burdensome. If assets are not properly transferred into the trust, it may not function as intended. Additionally, some individuals may find the privacy of a trust to be a drawback, as it can limit transparency compared to a will, which is a public document. Finally, family dynamics can complicate trust management and distribution.