Will or Trust: Which One Is Right for Me?
July 14, 2022
The question of having a will or a trust in an estate plan is a common one. Both tools provide advantages and disadvantages. Many people find out they need not just one or the other, but both to fulfill their needs.
Maybe the more important question is whether you have the information you need to decide what is best for you. As an estate planning attorney with three decades of experience, I can help ensure that you do.
I come from a family of educators. I understand how important it is to not just answer questions like this one by talking at someone but to provide the information you need to make the best decision for you. This is about your legacy. You should fully understand your estate planning documents. If you live in Columbia, Boonville, Jefferson City, or Fulton, Missouri, let me know if you want to learn more.
Why Is Having an Estate Plan Important?
An estate plan, which may comprise one document or many, depending on your needs, protects your beneficiaries and your assets. It allows you to make decisions regarding your legacy rather than leaving those decisions to the courts and to Missouri laws that guide them. Wills and trusts are two of the documents you may include in your estate plan.
What Does a Will Do?
A will is filed with the probate court upon the death of the maker (the “testator”). It directs the distribution of your assets to those you have named as beneficiaries and payment of applicable debts. The court oversees the administration of the estate as it is carried out by the personal representative named in the will. The representative’s job is to see that the decedent’s wishes, as expressed in the will, are carried out.
In Missouri, valid wills may be handwritten, oral, or typed, although there are specific requirements for each. Two witnesses are required for wills and should be adults who do not benefit from the estate. Handwritten wills must be signed by the testator and the witnesses. Oral, or “nuncupative” wills, are allowed only when the death of the testator is imminent and there is no time for a written will. Most wills are typed and signed by the testator and two witnesses. If the witnesses sign in the presence of a notary, they will not need to appear in court to testify to their signing of the will.
Wills are useful for estates with few assets subject to probate. However, because they must be probated, they become a matter of public record. They can be challenged by creditors and those left out of the will by the testator who would inherit under the law of intestate succession. Wills are the only tool by which you can designate a guardian for a minor child.
What Does a Trust Do?
Trusts are formed when you transfer all your assets out of personal ownership and into the ownership of the trust. There are three key types of trusts: irrevocable living trusts, revocable living trusts, and testamentary trusts.
With an irrevocable trust, once you transfer assets to the trust and name the beneficiaries of the trust, the trustee, and the successor trustee, you cannot change it. For that reason, these trusts have tremendous tax advantages.
You can make changes to a revocable trust up until your death. For example, you can take an asset you transferred to the trust and transfer ownership back to yourself. Or, you can name a beneficiary of the trust, then rescind that beneficiary at any time prior to death.
Testamentary trusts go into effect upon death. This trust directs the distribution of assets that are and are not subject to probate in conjunction with your will.
Irrevocable and revocable living trusts are not subject to probate which keeps the contents of the trust, including its assets and beneficiaries, out of the public record. Testamentary trusts are subject to probate with the accompanying will. You cannot name a guardian for a minor child in a trust, although you can direct the management of assets of your estate for their benefit.
How Do I Decide Which One Is Right for Me?
The complexity of any estate plan depends on factors such as the assets of the estate and those you wish to benefit from it. There are tax considerations, requirements to make them valid, issues regarding the right of survivorship of a spouse, and assets you can leave that require being addressed in neither a will nor a trust.
It can all sound complicated. Working with the right estate planning attorney can make all the difference in the world. Who you work with is important for many reasons, including the fact that you may build a lifelong relationship with that attorney. As things change in your life, such as marriage, divorce, the birth and death of children, and the accumulation of assets, your estate plan will need to change as well.
Skilled Legal Guidance for
Missouri Wills and Trusts
I have built a legal career on helping clients in Columbia and throughout Missouri not just create estate plans but understand them. Having one and understanding how it works provides the ultimate peace of mind for you and your loved ones.
It is never too early to begin working on your estate plan. Call David W. Walker, Attorney At Law today, and let’s get started.