by Angeline Oppenheimer

Created on: December 01, 2008   Last Updated: December 09, 2008

Wills or Trusts? The answer depends on your objectives and goals. Although both specify the beneficiary of your assets upon your death, there is one main difference. This is pointed out by Dennis Sandoval at the American Academy of Estate Planning Attorneys, "A will speaks for you only after you die. A living trust can help you while you are alive."

A will is a written document that determines how your estate will be handled and disposed of upon your death. It also allows you to name a guardian for your minor children after your death, a provision not possible in a trust unless a supplemental document is attached.

On the other hand, a living trust (sometimes referred to as a revocable will) is set up and takes effect during your lifetime with a written document known as a trust agreement. It provides lifetime and after-death property management as well as tax-related planning. Assets named are managed by a trustee for your beneficiaries. You can name yourself as both trustee and beneficiary.
You also retain the right to alter, amend or revoke the trust anytime before your death.

Pros and Cons of Wills and Trusts

1. Cost

Wills generally cost 2 or 3 times less to prepare than a living trust. It is easier to set up and less expensive to create or change the document.

If you own smaller estates, the setup and maintenance costs for a living trust may outweigh any after-death savings. In addition, living trust needs constant management in your lifetime and any transfer of assets must be actually transferred to the trustee for the living trust to be viable. It generally takes more time to amend any changes and any transfers have to be retitled.

2. Probates

Probably the most significant differences between a will and trust, property bequeathed in a will must go through a process called probate. It is a process whereby the government makes sure your will is authentic and that your debts, taxes and legal fees are paid; your assets are documented and appraised before they are distributed. A simple probate can take any time between 4 to 6 months and some can take as long as 3 years. Not only is it time consuming, the process can be costly and frustating.

Probate costs can get exorbitant if you have out of state property as they are subjected to out-of-state proceedings as well. In the state of Michigan, there is probate on the will irregardless of the amount. As such, it may be wiser to go with living trust.

Living Trust is not subjected to probate and your assets get distributed

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