Understanding the similarities and differences between a Will and a Trust is very important when setting up your estate plan.
Trusts and wills perform similar functions: they allow you to designate who you would like to inherit your belongings and to provide for your loved ones after you die. However, they achieve these goals in different ways.
What is a Will?
A Will is a legal document that sets forth your wishes regarding the distribution of your property to your designated devisees and heirs. In it, you can:
- Designate who should inherit specific assets;
- Nominate a legal guardian for your minor children;
- Appoint an executor of your estate; and
- Leave instructions for your burial.
In the state of Utah, order to be valid, a Will must be signed and witnessed by two witnesses. After you pass away, it must be filed with the probate court in your jurisdiction and carried out by your designated executor. Your will is then publicly available in the records of the probate court. It should be noted that in Utah, a Will is only valid for three years after the death of the Testator (or the person who created the Will). After three years, the probate court will distribute the estate according to Utah statute.
What is a Trust?
A Trust is a document that transfers ownership of assets from the Trustor (the person who creates the trust) to a Trustee to hold on behalf of a Beneficiary. It creates fiduciary relationship between the Trustor and the Trustee. The Trustor gives the Trustee the right to hold title to property or assets for the benefit of the Beneficiaries, but the Trustee has the duty to care for the Trust and its assets and make sure that they are only used for the purposes that the Yrustor designated.
Creating a Trust expands your options when it comes to managing your assets, whether you’re trying to shield your wealth from taxes or pass it on to your children. It allows you to leave specific directions for how and when you would like your assets to be distributed. And it does not have to be probated in order to be valid.
Trusts are most useful when they’re kept up-to-date with all your property. This means any time you acquire a new asset — like a home, vehicle, or bank account — you would ideally transfer that asset to your Trust as soon as possible. As a result, your Yrust will need continuous maintenance, since you’ll likely continue to acquire new property throughout your life.
Should you have a Will or a Trust?
The best estate-planning tool for you will depend on your situation and preferences. As we’ve discussed, both allow you to specify who should inherit your belongings, nominate a guardian for your children, and leave instructions for your death and burial. While a Will might be enough to cover your needs, there are many instances where having a Trust is advantageous, including:
If you have a large or complicated estate
If you own a business
If you want to avoid the cost and delay of probate court
If you want the transfer of your assets to your heirs to be private
To capture the main similarities and differences between a Trust and a Will, we have created this table for easy reference.
Benefits: | Will: | Trust: |
Avoids probate | No | Yes |
Stays private | No | Yes |
Nominates a guardian for minor children | Yes | Yes |
Memorializes your final arrangements and wishes | Yes | Yes |
Leaves specific gifts | Yes | Yes |
Requires little maintenance | Yes | No |
If you have questions about your estate and which document would best serve you, contact us today to set up a consultation.
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