Well, the answer is: it depends on your goals and specific circumstances. Will-based estate plans and trust-based estate plans can accomplish the same goal, which is to distribute your assets upon your death. That being said, will-based plans do have limitations that trust-based plans do not. Trust-based plans have more duties at the onset than a will-based plan. So, you would need to weigh each of the options to determine which is best for you.
A will-based estate plan is a plan that distributes your assets via a will. Some of the benefits of a will-based estate plan are they are much easier to set up and will-based plans are generally less expensive than a trust-based plan. Some of the drawbacks of a will-based plan are they need to go through probate to distribute assets, they are only effective upon your death, and privacy concerns.
When a person passes with a will, with limited exceptions, New Hampshire law requires court supervision of the distribution of the estate through a process called probate. Probate can be burdensome, costly, and delays the beneficiaries in your will from receiving their inheritance. Additionally, since probate is a public process, all documents filed – including the will – are available for the public to view. This issue can raise privacy concerns as the public can see who is inheriting what from your estate. Lastly, wills are only effective once you pass away. If you become incapacitated, someone will have to step in and manage your assets via a power of attorney or by seeking court approval to become a guardian.
On the other hand, a trust-based estate plan is a plan that distributes your assets via a more comprehensive document called a trust. There are three main roles in a trust: the grantor, the trustee, and the beneficiary. The grantor is the person who creates the trust; the trustee is the person who is responsible for managing the assets for the beneficiary; and the beneficiary is the person who receives items or income from the trust. When you create a trust, you are all three of these people.
Some of the benefits of a trust are distributions are not supervised by the court, the trust is effective during your lifetime, a trust can have successor trustees for periods of the grantor/trustee’s incapacity, and they allow a staggered distribution of an inheritance rather than an outright distribution.
While trusts offer many benefits, there are a couple of drawbacks to them. First, since they are more complex documents, trust-based plans are generally more expensive than will-based plans. Second, unlike a will, a trust needs to be “funded,” which essentially means retitling assets into the trust. This does take some initial work, but the benefits gained by the work are great.
Either way, a will-based or trust-based estate plan is much better than having no plan at all. Give Alfano Law a call to set up a consultation so we can discuss which option is the best for your unique circumstances.
You can contact Alfano Law by calling (603) 856-8411 or at this link.