There are two tools available to spend the bulk of your financial legacy. The best option for one person may not be optimal for another.

Both a will and a trust can be the basis of your estate plan. If it is a trust, it is usually a revocable living trust.

They are not exclusive. Most estate plans have both a will and one or more trusts. But typically, one document controls how most of the estate is distributed and implements your most important decisions.

Carefully consider the differences between the two tools, because the best option depends on your situation.

A key distinction between a will and a trust is that the property subject to a will goes through probate. Ownership of a trust prevents probate.

Succession has advantages and disadvantages.

The main disadvantages of probate are its well-known cost and delay.

Probate requires an inventory of the estate’s assets and liabilities to be compiled and filed with a court with the will. The court reviews all of this and allows people the opportunity to challenge the will. Assets cannot be distributed to heirs until approved by the court.

The court charges probate fees, and a lawyer or executor (or both) are often involved and charge fees. In some states, it can be costly and costly for even small estates to go through probate.

Probate is not long or expensive in all states. Some states have streamlined probate processes, especially for small estates, making them less expensive and time consuming. These states reserve the traditional probate process for the most valuable properties. Check with your estate planner about the local process and cost.

Lack of privacy is another downside of probate. After it is filed with the court, the will is open to the public.

The wills of many celebrities are available online. Bing Crosby is said to have revised his estate plan by transferring most of his assets to living trusts after his first wife died and details of his will became public.

Many celebrities and wealthy individuals transfer most of their assets through trusts primarily to avoid publicity.

However, the public scrutiny of a will and probate can be an advantage.

Succession provides checks and balances. In addition to the court reviewing the details, heirs and potential heirs can view the inventory of assets filed with the court and details of how the estate will be distributed. They can determine if assets are missing or if someone appears to have persuaded the deceased to change the terms of the will.

A will is more likely to be contested than a trust. Trusts are rarely challenged, partly because their details are not public. Also, the rules for contesting wills are well established, while there are fewer laws regarding contesting trusts.

Some people think that using primarily a will rather than a living trust is more efficient in the long run, because it’s easy to transfer assets into or out of your estate when they’re in your name. Anything you own at the time of your death is automatically included in your estate.

With a trust, you must make sure that you name the trust as the legal owner of the property. Many people do not transfer legal title to property to trusts. The trust must have legal title to the assets to provide its benefits.

Cost may be a factor for some. It is generally less expensive to prepare a will than a trust.

Some lawyers believe that trusts are less likely to be updated. They say that people know when a will needs to be updated, but they often incorrectly believe that a trust doesn’t need to be revised.

A living trust, at least in theory, provides a smoother transition of property ownership and management.

He initially serves as a trustee and manages the property. The successor trustee, or trustees, you named in the trust agreement automatically takes over the management of the property after you become disabled or die. The successor trustee manages and distributes the trust property in accordance with the terms of the trust. The courts are not involved.

However, when you use a will, after you pass away, title to the property passes from you to the estate and ultimately to the beneficial owners. The probate court oversees the process. If you become disabled, whoever has your power of attorney must present it to financial institutions and have them accept it before your assets can be administered. If there is no power of attorney or financial institutions do not accept it, the courts could be involved.

However, trustee transitions are not always smooth. Financial institutions and others doing business with the trust must choose to accept the authority of a successor trustee. Financial firms, in particular, require a high level of justification before they will recognize the successor trustee. While a successor trustee may not have to go to court, it could take some time and expense to complete the transition. It is best to make sure that everyone who deals with you as a trustee is familiar with your designated successor and his plans.

Every estate must have a will and will likely have at least one trust. The problem is which vehicle he uses to transfer most of his wealth to the next owners. Work with your estate planner to determine which best suits your estate and your goals for cost, efficiency, privacy, and more.

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