The first decision anyone has to make when creating an estate plan is whether they want to use a will or a trust as the foundation for that plan.  These two similar but unique documents are alternatives to one another and when it comes to estate planning, deciding between a will and a trust can feel like a big decision—but there’s no one-size-fits-all answer.  A will might work perfectly for one family, while another might benefit more from the flexibility and probate-avoidance of a trust.  It’s all about what makes sense for your family’s unique situation.  Maybe a will is enough, or maybe you want the added protection for your kids’ inheritance that a trust can offer.  Yes, trusts can have a higher upfront cost, but they might save your family money, time, and stress in the long run.  The real question is: what’s right for your family? Let’s break it down.

 

What Is A Will?

A will is a document that allows you to put your wishes into writing, specifying where you want your assets to go after you pass away.  It can direct things like your home, vehicles, and personal property (personal property being things like clothes, furniture, jewelry, firearms, etc.).  Keep in mind, a will doesn’t control assets with designated beneficiaries, like retirement accounts and life insurance.

While a will is a useful tool for many, it’s not always the best option for everyone.  That’s because when someone dies with a will, their family must go through a process called probate before the deceased’s assets can be distributed.  Probate is a formal court case where a judge oversees the transfer of assets through inheritance.  Many people aren’t aware of probate’s challenges until the probate process begins, leaving families surprised and, in many cases, frustrated.

 

A Will Goes Through Probate, Here Are The Downsides of Probate:

Probate is expensive.  On average, probate costs between 3-8% of the total estate going through the process.  This is due to various fees: court fees, executor fees, bond fees, real estate appraisals, business valuations, and of course, attorney fees.  These costs can add up quickly, even for what might seem like a simple estate.  For a somewhat modest estate worth $750,000, the family could expect probate to cost between $22,500 and $60,000.

Probate takes time.  In Tennessee, probate often lasts between 12 and 18 months—or sometimes even years.  During this time, assets are frozen, and a judge’s permission is needed to do almost anything.  If a loved one relied on those assets for support, such as a child’s tuition, they might not have access to that money until probate is complete.

Probate is public.  Probate essentially puts your financial life on display.  When a will is filed, it becomes a public document, along with a list of assets, their value, and who is inheriting them.  Not only is this information personal, but it can also lead to family disputes, potentially increasing the cost and complexity of the probate process.

Despite these downsides, a will can still be a good option for some families, especially if they aren’t concerned about the costs or delays of probate.  For others who want to avoid these pitfalls, a trust may be a better alternative.

 

A Living Trust Instead Of A Will May be a Better Alternative

A trust is an alternative to a will in most cases, and it has grown in popularity over the past few decades to become the go-to estate planning tool in most states—including Tennessee.  Like a will, a trust allows you to put your wishes into writing, specifying where you want your assets to go.  However, unlike a will, a trust can manage assets with listed beneficiaries such as retirement accounts and life insurance.  One instance when a trust is almost always preferable over a will is when you own real estate.  When real estate has to go through the probate process, selling or passing on the family home becomes a slow and costly process in most cases.  A trust streamlines the process, saving money, time, and headache.

While both wills and trusts serve similar purposes, a trust offers more control and protection.

The biggest advantage of a trust is that it bypasses probate entirely.  This means your family can avoid the downsides of probate, such as high costs, long delays, and public exposure.  Since there’s no court involvement, transferring assets is simpler and cheaper.  While there may still be some nominal fees, your family won’t lose 3-8% of their inheritance to probate costs.  Additionally, assets can typically be transferred within weeks instead of months or years, which is especially important if loved ones need access to the funds quickly.  A trust also ensures that your estate remains private, both during your life and after your death. This privacy can help avoid family conflicts and keeps sensitive financial details out of the public eye.

If avoiding probate is important to you, then a trust is likely the better choice over a will. But what if you want to protect your children’s inheritance after you’re gone?

 

A Living Trust Can Protect Your Kids After You’re Gone

Many parents worry about their children losing their inheritance—whether through their children’s own financial immaturity or through outside factors like divorce, bankruptcy, or lawsuits.  The good news is that a trust can help safeguard your children’s inheritance from these risks.

Trusts offer a range of protections based on the parent’s goals and the child’s circumstances.  For example, if a parent has a financially stable adult child, they may want to give them control over their inheritance while still providing some protection.  On the other hand, if a child is struggling with personal challenges like substance abuse, the parent may wish to implement more restrictive measures to make sure their inheritance is protected—or even to encourage better choices.

Through a trust, parents can implement tailored protections to prevent their children’s inheritance from being lost due to poor financial decisions, divorce settlements, or legal judgments.  As an example, let’s say a parent leaves an inheritance of $500,000 to their daughter who is married.  Two years later the daughter divorces her husband.  In this case, there is a chance that the divorcing husband could walk away with half of the daughter’s inheritance if the parent passed that inheritance to the daughter with a will.  A trust on the other hand can eliminate this threat and make sure that the entire inheritance stays with the daughter for her life.

 

The Best Choice Depends on Your Unique Family

At the end of the day, the decision between a will and a trust comes down to your family’s unique needs and goals.  Both have their advantages, and what works best for one family might not be ideal for another.  Whether you’re looking to avoid probate, protect your children’s inheritance, or keep initial costs low, the key is to choose the option that gives you peace of mind for the future.  Working with an experienced estate planning attorney will help! Book a call with me by clicking the link below.