One of the most frequently asked questions that we hear from our clients is in regards to wills and trusts and when one is better to use over the other. When to use one instead of the other is not a cut-and-dry answer. The use of a trust in place of a will is highly dependent on the intricacies of the estate in question and how those assets will be distributed. Though using a trust in place of a will does have its advantages in many cases, there are also negatives that need to be fully considered before establishing a trust. Trusts are often used along with a will to distribute property and to name guardians for any minor children.

Some of the advantages of establishing a trust include:

  • The ability to cover important items that a will cannot. These items may include assets such as life insurance policies, jointly-owned properties and retirement accounts.
  • The lessened likelihood of being contested. Where a will becomes public after death, a trust remains private leaving it less likely to be contested.
  • Much more flexibility than a will. A trust can include a number of beneficiaries and can spread the transfer of property over time. A trust can transfer money to a minor on a monthly basis instead of in one lump sum until that child reaches adulthood if so desired.
  • The ability to avoid or lessen the tax burden. Because the government can take up to 40% of the inheritance one receives, being able to avoid these taxes is a huge benefit.

Because a trust can take much longer to create and cost more than a basic will, true analysis of a person’s entire estate and individual circumstances is recommended before deciding on whether a trust is the correct and proper way to protect your estate after you pass. As experienced and knowledgeable financial advisors in Naples, we can help you discern when a trust is the right way to go.