Will-Based vs. Trust-Based Estate Planning – Which One is Right for You?

Estate planning is one of the most important steps you can take to protect your loved ones and ensure your wishes are honored. There are two general approaches to planning — a will-based plan or a trust-based plan. While both serve to distribute your assets after your passing, they have their differences and offer distinct advantages.

Will vs. Trust: Understanding the Basics

Will-Based Estate Plan
A will is a legal document that outlines how you want your assets distributed upon your death. It allows you to name beneficiaries, appoint a personal representative or executor to handle your estate, and designate guardians for minor children. However, a will must go through probate, a court-supervised process that can be time-consuming and costly.

Key Features of a Will-Based Plan:

  • Goes into effect only after you pass away
  • Requires probate, which can take months or even years
  • Becomes public record during probate
  • Allows you to name guardians for minor children
  • Less expensive to set up initially but may cost more in probate fees

Trust-Based Estate Plan
A revocable living trust is a legal form of ownership that provides for the management of your assets during lifetime and their management and distribution according to your instructions after your death. Unlike a will, a typical trust takes effect during your lifetime. With a trust, probate can be avoided, providing management of your assets during time that you may be incapacitated and allowing a smoother transition of assets to your beneficiaries after your death.

Key Features of a Trust-Based Plan:

  • Avoids probate, saving time and money
  • Remains private, unlike a will that becomes public record
  • Provides for incapacity planning by allowing a successor trustee to manage assets if you become unable to do so
  • Can help minimize estate taxes and protect assets for beneficiaries
  • Generally more expensive to set up but saves costs in the long run by avoiding probate

Additional Documents for a Comprehensive Estate Plan
Regardless of whether you choose a will-based or trust-based plan, a well-rounded estate plan should also include:

  1. Durable Power of Attorney – Appoints someone to manage your financial affairs if you become incapacitated.
  2. Healthcare Power of Attorney – Designates a trusted individual to make medical decisions on your behalf.
  3. Living Will (Advance Directive) – Provisions in your Healthcare Power of Attorney or separate document that specifies your preferences for medical treatment in case of a terminal illness or incapacitation.
  4. HIPAA Authorization – Allows designated individuals to access your medical records and communicate with healthcare providers.
  5. Final Disposition Instructions – Provides guidance on your wishes for burial, cremation, or other final arrangements.

Which Plan Is Right for You?
Choosing between a will-based and trust-based estate plan depends on your specific goals, financial situation, and family dynamics. If you have a modest estate and do not mind the probate process, a will-based plan may suffice. However, if you own a home (whether paid for or not), have minor children, or wish to avoid probate, a trust-based plan is often the better choice.

Consulting with an experienced estate planning attorney can help ensure that your estate plan aligns with your needs and provides the best protection for your loved ones. If you’re ready to secure your legacy, contact our office today to discuss your estate planning options.