A will and a trust can both play important roles in an estate plan, but they work differently. Understanding the basics can help you prepare for a conversation with an estate planning professional.
What does a will do?
A will provides instructions for how certain assets should be distributed after death. It can also name an executor and, for parents of minor children, nominate a guardian.
What does a trust do?
A trust is a legal arrangement that can hold and manage assets according to its terms. Depending on the type of trust and how it is established and funded, it may help manage assets during your lifetime and provide instructions for their distribution after death.
What about probate?
Assets passing through a will generally go through probate. Properly titled assets held in certain trusts may be able to pass according to the trust's terms without going through the probate process.
Do you need one or both?
It isn't necessarily an either-or decision. Some estate plans include both a will and a trust, along with other documents such as powers of attorney and healthcare directives.
Estate planning is about more than transferring assets.
A thoughtful estate plan can help document your wishes, identify who should make certain decisions when necessary, and provide instructions for the people and assets important to you.