“What’s the difference between a will and a trust?” is among those frequently-asked questions posed to lawyers, and rightfully so. The nuts and bolts of estate planning are far from intuitive. So here’s a 1-page primer.
No Will, No Way
If you die without a will or a trust, your assets will normally have to be probated. Probate courts oversee the management, liquidation, and distribution of those assets. Like any court proceedings, probate can be very time consuming and expensive, commonly lasting 18 months or more and costing thousands in legal fees. Worse yet, state law (rather than you) will dictate who gets your assets. Under Nevada law, assets typically pass to children, parents, siblings, distant relatives, and ultimately even the State. Sorry step-children, girlfriends, boyfriends, and best friends, you’re out of luck.
A will is one useful tool to override state law and control who gets your assets. So, for instance, you could specify that your closest friend since birth inherits rather than your long lost cousin twice removed. The major downside of only having a will is that your assets are still subject to the time-consuming and expensive probate process.
Trust Me, I’m a Lawyer
Having a trust is typically the fastest, cheapest, and easiest way to pass assets to loved ones upon death. A trust is a separate entity that owns your assets, including real estate, vehicles, bank accounts, and the like. When you pass away, a designated successor trustee (usually a family member or close friend) will step in, manage the trust assets, and distribute them to your designated beneficiaries in the manner specified in your trust. And, best of all, it’s normally done without any court entanglement or expense.
For these reasons and others, it’s very important to seek quality legal advice when developing an estate plan tailored to your unique circumstances and desires.