Justin, I’m ready to get my affairs in order, but I don’t even know what questions to ask. I assume I either need a will or a trust, but I don’t know which is better. How do I decide which is right for me? – Richard
Richard, I’m glad to hear that you’re ready to get things in order, and you’re right on track in asking about the difference between a will and a trust. For most people, one of those two documents will be the centerpiece of their estate plan.
In a lot of ways, the will and the trust are very similar. In both, you will record your wishes for how you want your assets divided among your heirs at the time of your death, and in both, you will appoint someone to be in charge of the process. In a will you name an executor, while in a trust you name a trustee, but it’s a similar role either way.
The biggest difference is this: a trust keeps your estate out of probate court, while a will does not. A will is a set of instructions specifically designed for probate court. In Arkansas, probate is a long, drawn out process designed primarily to protect your potential creditors. It is very public, involving newspaper notices and public court filings. And worst of all, it is very expensive, with the legal fees alone running around three to five percent of the value of the estate.
Most people want to stay as far away from probate court as they can, and using trust as your primary estate planning document can do that.