If you are considering creating an estate plan, you may wonder, How do you decide on a will vs a trust?
A will provides a comprehensive plan for how you would like your assets to be distributed after you die. In contrast, a trust owns assets for the benefit of one or more parties (called beneficiaries). A will alone may be more appropriate if you have a simple estate, whereas a trust combined with a will may be a better option if you have significant assets or want to provide for children with special needs. Other factors may play a role in determining whether a will or a trust is more appropriate in your situation.
Batson Nolan PLC provides compassionate and effective legal counsel to clients seeking to create estate plans. We understand the challenges our clients face when deciding on the best strategy to protect their assets and provide for their loved ones. We help them identify and overcome these challenges.
What Is a Will?
A will is a document you and your lawyer draft that explains what you want to happen to your assets after you die. The will usually names your heirs (or possible heirs, even if you disinherit them later) and your property. It also identifies a person (an administrator or executor) who will carry out the instructions in the will. Further, the instrument says who inherits your assets (and who does not) and the percentage of the estate or what specific assets they are to receive. Finally, the will typically indicates how you would like to be buried.
What Is a Trust?
A trust is a versatile document that allows you to set aside assets for the benefit of named beneficiaries. You (as the settlor or grantor) also designate a trustee who carries out the instructions in the trust. You can create a trust that starts while you are alive or set one up to become effective when you pass away (a testamentary trust). Trusts are a beneficial option for many, especially those with a large estate, because it is a way to bypass the probate process and possibly reduce the amount of estate taxes your administrator must pay.
How Do You Create a Trust?
There are many ways to create a Tennessee trust. You can include a provision in your will that establishes a trust when you pass away. This type of trust is typically called a testamentary trust. Alternatively, you can create a standalone trust separate from your will. You can fund the trust by putting assets in the trust’s name when you are alive or setting it up so that certain assets automatically transfer into the trust when you pass away.
What Are the Different Types of Trusts?
Tennessee allows individuals to create multiple types of trusts. Common types of trusts include the following:
- Revocable trusts, which you can easily change during your lifetime;
- Irrevocable trusts, which you cannot change easily during your lifetime;
- Testamentary trusts, created by a provision in one’s will;
- A special needs trust designed to support a child or loved one with special needs; and
- Charitable trusts designed to support a charity.
These are just a few types of trusts available for those creating estate plans in Tennessee. A lawyer can help you decide what kind of trust is appropriate in your situation.
What Is the Difference Between a Will and a Trust?
A will is a comprehensive plan that explains what happens to your estate after you pass away. To carry out the will’s instructions, the administrator or executor must file the will with the probate court, which then validates the will and makes distributions accordingly.
On the other hand, a trust typically concerns only a portion of someone’s property. The trustee does not need to file the trust with the court to follow the plan set out in the trust. The person who creates the trust can be a beneficiary of the trust during their lifetime. In contrast, the testator (the person who writes the will) cannot receive property or benefit directly from the will.
How Do You Decide on a Will vs a Trust?
Deciding on a will vs a trust is an important decision and should be taken carefully. In most cases, you can have both a trust and a will, but an attorney is best positioned to help you make this decision. You can use a trust to provide ongoing support for a loved one (such as a child) with special needs. Or you can set up a trust to provide your own care while you are alive and name others as beneficiaries when you pass away.
To decide which is appropriate for your situation, take time to determine your goals and preferences. Another consideration is the size of your estate. If you have a large estate, creating a trust may be beneficial to help lessen the overall estate tax burden. If you have a small estate, a will may be the only instrument you need to carry out your plans and provide your loved ones with the support they require.
Contact Batson Nolan PLC Today!
Creating an effective estate plan requires taking inventory of your assets and priorities. There’s no one-size-fits-all solution when talking about something so personal as a plan for what happens to your legacy after you die.
Our team has decades of experience helping people throughout Tennessee express their wishes and develop a strategy to accomplish those goals. Christina Bartee has been practicing estate planning law for over 20 years. In addition to helping clients achieve their goals by creating an estate plan that works for them, she also manages the firm’s Springfield office.
Contact our team today to start your estate planning journey.