When looking for an estate planning tool in Utah, debating the difference of a will vs trust can help to ensure you are choosing the right option for your situation.
Both a will and trust are used to protect your assets and guarantee they’re passed down to the proper heirs at either the time of your passing, or if you’re no longer able to make those decisions for yourself.
However, when transferring wealth the process becomes a little more complex. It’s sometimes even possible to need both a will and a trust.
To help you differentiate between the two and help make the correct choice, Ruesch and Reeve Legal will examine how a will vs how a trust can be used to provide for your heirs, including:
- Whether you need a will, a trust, or both
- The different types of trusts
- The advantages and disadvantages of wills and trusts
Will vs Trust
In short, a will could be described as a written document explaining a person’s wishes upon passing. Coordinating things such as: naming new guardians of any minor children, passing down assets, or wealth to certain loved ones, or charities.
A will only comes active for a person after their passing. Versus a trust, which becomes active the day it’s created. Allowing a grantor to list out the distribution of assets before death.
There are trusts that can be irrevocable, which aren’t allowed to be changed after they’re finalized. There’s also living trusts, which can be changed in the future by a grantor.
A will must always go through the legal process known as probate. This means an authorized court administrator has to examine them before being finalized. This whole process is known to become long and even continue for an extended period of time, if say a family member contests the will.
A trust is not required to go through the probate process and cannot be contested when the grantor passes away.
Common Types of a Will
One of the more common types of a will is called testamentary. This will is legally enforceable and states how you want your affairs to be handled, as well as how your assets will be distributed after your passing.
This will may also include a directive stating how you’d like your funeral/and/or memorial to be held.
A will is a very important segment of estate planning. We urge you to seek professional legal guidance regarding obtaining a will.
In a will you can find:
- List of assets and debts
- Family heirlooms
- Safe deposit boxes
You are able to leave these personal assets to any heirs, friends, or even charities of your choice.
When preparing a will, there are drawbacks you should be aware of. Though it can work during an estate transfer and other legal processes after death.
After your passing, your estate will then become public record. Using this example, anything left by will must go through the probate court process.
Furthermore, probate attorneys retirement accounts and life insurance policies pass straight to named beneficiaries do not go through the probate process.
Guardianship of Minor Children
If you’re someone with minor children, it’s a good idea to create a will that determines guardianship of your children in the event of your passing.
If there is no guardian appointed when you pass away, the surviving family will then need to go to probate court and have a guardian appointed for your children. It’s a good idea to do this because if you don’t, the person they appoint themselves might not be the one you’d prefer to take over the care of your children.
It’s best to think about the ways you’ll give your children a portion of your estate through a will. The will can place the decision with a judge that’s looking over your estate transfer.
A testamentary will ensure your proper wishes are being granted after your passing. A will can ultimately give better insight and direction over how your assets will be passed to your beneficiaries.
Lastly, a will can cover how you’d wish for your children to use the money, or other assets you may have left behind to them.
It is true that any children, whether biological or adopted, have the right to your inheritance. Having a will in place gives you the choice to disinherit a specific child, if for whatever reason you feel that needs to be done. This law varies by state.
As well as disinheriting a spouse, this can be done under specific circumstances.
However, it’s important to know the state laws where you reside. It could fall under common-law state, a community property state, or even an equitable distribution state.
Someone can disinherit their spouse only in a community property state. Which different stipulations, each varies on what and how much you may disinherit from that person.
Important fact: a person can only disinherit a spouse or child through a will.
What if I Pass With No Will in Place?
Someone who passes away without a will, will then need the state to get involved, called intestate. The state will then oversee all of the asset distribution taking place.
If you had minor children at the time of passing, the court then appoints a guardian for them. Following a set formula on how to divide assets, the courts could create end results that may negatively impact any surviving children, or spouse.
Not only that, but having a will in place before passing protects survivors against estate tax liability.
As of 2021, U.S. estate tax returns are required to be filed if your estate is valued at $11.7 million. If your estate is worth less than this figure, there is no tax return required, and you will not be charged an estate tax.
Having a trust is just another option for estate transfer. Simply a fiduciary relationship where you’re giving someone else the authority to take over your assets. Transferring them to the third party, or your beneficiaries.
A trust may be put in place for many reasons, with a variety of trust types.
Ultimately, there are two categories of a trust: living and testamentary.
A will may be used when creating a testamentary trust. It’s also possible to create a trust with the hopes of avoiding probate court. This is called a revocable living trust.
So, talking about a revocable living trust for an estate transfer in Utah. Similar to a will, a trust requires a transfer of property to your loved ones after passing.
Called a living trust because it’s created while the person, known as the trustor, is still alive. It’s revocable and can be changed during the trustor’s lifetime. They maintain ownership of the property being held by the trust while they’re still alive.
The trust will then become into play after the trustor’s passing. Not like a will, a living trust transfers property without probate court. With no court, or attorney fees after they have the trust finalized.
The property in a trust will immediately be passed to the beneficiaries after the trustor’s passing.
A trust can run more expensive than a will, to both create and then maintain. With a trustee being named and controlling the distribution of assets, completely following the wishes of a trustor.
A testamentary trust is another way to control what happens with your estate after your passing.
A declaration of trust can provide basic trust terms. With your estate staying private and going right to your named heirs. No need to pay a probate attorney, or any court costs. Your friends and family can help in avoiding being held up in probate court for a year, or even longer.
From a planner’s perspective, trust can be a great choice for estate transfer.
Will vs Trust in Utah Key Differences
Both being an important tool to estate planning in Utah, wills and trusts have important differences.
A trust is first set in motion when the grantor has signed it. A will doesn’t technically go into motion until the trustor passes. When they do, the will goes through probate where a trust doesn’t have to.
A will allows you to name guardianship of minor children, as well as specially request your funeral or memorial plans.
Will vs Trust in Utah FAQs
What is Better, a Will, or a Trust?
A trust can somewhat streamline the transfer of an estate when you pass. Allowing you to avoid long and expensive probate periods. However, if you do have any minor children, having a will that chooses a specific guardian is a good choice. It protects both your children and inheritance.
Choosing between creating a will, or a trust is a very personalized process. Some experts may even recommend that you have both.
A will is usually not as expensive and quite easier to create than a trust. Trusts are expensive and a lot more complicated legal documents.
Do You Need Both a Trust and a Will?
Most people should have a will in place, but not all people have use for a living or irrevocable trust.
If you’re someone with property, or assets to put in a trust, or you have children who are minors having both estate-planning options might be a good choice.
Does a Will Override a Living Trust?
Both being two different legal documents, a will vs trust don’t really cancel each other out. If an issue appears, having a living trust in place can override a will. A trust is its own entity.
Getting a Will vs Trust in Utah
At Ruesch and Reeve we work to understand your estate planning goals and develop the strategy to implement those to protect your family’s success. We provide standard estate planning for smaller estates, including preparation of simple wills and trusts always providing expert advice.
We also specialize in estate planning for large more complex estates including preparation of complex wills and trust agreements, tax planning advice, implementing probate avoidance techniques, initiating gifting programs and rearrangement of property ownership and beneficiary designations to achieve estate planning goals.
Contact Ruesch & Reeve, PLLC.