Wills and trusts are similar in that they are both estate planning tools. They can be used alone or combined to create a comprehensive plan for an estate.
Despite their similarities, they are different in a few ways, including:
- Wills only become effective following a person’s death, whereas trusts are effective at creation
- Wills direct the distribution of property upon death and appoint someone to oversee this process, whereas trusts can distribute property prior to death
- Trusts cover only what is in the trust, whereas wills cover all assets owned solely by the will’s creator, but not jointly owned property or property in a trust
- Wills are subject to probate, whereas trusts do not require court oversight. New York’s probate court is known as the Surrogate’s Court. You can learn more about the court at <a href = “http://www.nycourts.gov/courts/nyc/surrogates/index.shtml”>the website for the New York Unified Court System.</a>
- Wills are public record, whereas trusts are private
Assessing the Benefits of Wills and Trusts
Each has its own advantages and disadvantages. Your attorney can explain these and help you determine which, or if both, of these estate planning tools is the best choice for you. In general, trusts provide many of the same benefits as wills, but also offer privacy and probate advantages. However, trusts tend to be more complicated and cost more to create.
Setting up a trust and funding a trust are two separate processes – you’re required to transfer your assets to the trust once it’s created through separate paperwork. You must also make the trust the beneficiary of your life insurance policies.
A will is simpler to create, but it might not meet all of the needs of your estate. Some people find that both a will and a trust are necessary. The only way you can know for sure is to review your assets with an experienced attorney and discuss the way in which a will and a trust would affect the estate.
Some examples of when Trust are good to use would include where your heirs at law are not fully known and can’t be located easily; beneficiaries with special needs could require a Trust; Trust could be used to preserve assets from Creditors or become eligible for various governmental benefits such as Medicaid.
If you are interested in learning more about the benefits and drawbacks of wills and trusts, or you are ready to begin estate planning, we can help. Contact the Law Offices of Elan Wurtzel at 516.822.7866 to schedule a consultation.
Source: NY Courts