Cray Law, for more than one hundred (100) years, has used Wills and Trusts to assist clients in our estate planning practice. Making sure you know the difference so that you can make an informed decision is our passion.

A Will and a Trust can be used to distribute assets upon death. Both allow you to name and designate who receives your assets and appoint a fiduciary to control the distribution of the assets. However, there are some important differences.

This article will review the most common type of Trust (Revocable Trust) and compare it to a Will.

A. KEY DIFFERENCES BETWEEN A WILL AND A TRUST

1. COST
A Trust generally avoids probate whereas a Will does not.
Without a plan upon death, your assets generally go through probate. The probate process in Iowa is costly and slow. Attorney fees alone can cost up to 2% of your assets.

There are, of course, costs to setting up a Trust. Yes, a Trust is usually more expensive to draft, and you will transfer your assets into the Trust (or “fund” the Trust), but long term we almost always          find that TRUSTS are substantially less in cost.

Our attorneys always discuss with you that some of your larger assets are distributed outside of the Trust or Will. Accounts with a pay-on-death designation (POD) or beneficiary designation are              usually paid outside of both the Will and Trust.

To determine which option is more cost effective, we will look at your assets, discuss all your options and then help you make an informed decision between a Trust or a Will.
Cost typically is the tipping point for most clients selecting between a Trust or a Will.

2. PRIVACY
A Trust is private, while a Will is not.
Upon death, a Will is filed with the Court. The assets you own are inventoried on a format that is easy to understand and is filed for the world on the Court’s website.

This personal, private information will be available 24 hours a day, 365 days a year, for anyone to review. Anyone can also see who received the assets.

A Trust is not filed with the Court. A Certification of Trust, which is included with each Trust, will be provided to financial institutions or anyone else who may need to know about the existence of the        Trust. A Certification of Trust provides limited details of the Trust and does not require anyone to see the entire Trust document or know the assets within the Trust.

3. SPEED IN GETTING ASSETS TO YOUR LOVED ONES
A Trust is effective upon signing, while a Will is effective upon your death.

A Trust is effective when you sign the Trust Agreement, therefore a Trustee can direct your assets immediately. This means a successor Trustee can control your assets in the event you become            incapacitated but are still living. The Executor of your Will cannot control your assets until you pass. When you pass with a Trust, your assets can generally be distributed immediately or within a              matter of weeks.

A Will that is required to be administered through the probate process may be held up for many months or even years. Additionally, the probate process is open to the public on the Court’s website.

B. DO I CHOOSE EITHER A WILL OR A TRUST?

We professionally appreciate assisting you through the entire process of choosing either a Will or Trust.

Note that it is slightly misleading to say you will have either a Will or a Trust because with a Trust-based plan, you will typically want to have a Will as well. There is a very simple Will called a “Pour-Over Will” that accompanies a Trust. This Pour-Over Will is a backup plan to catch any assets that have not yet been transferred to your Trust at the time of death. It “pours” any missed assets into your Trust upon your death. This Will allows you to appoint a GUARDIAN for your minor or disabled and dependent children in the event one is needed.

C. WHICH ONE IS RIGHT FOR YOU?

EITHER PLAN IS BETTER THAN NO PLAN WHEN IT COMES TO ESTATE PLANNING.

While a Will can be simpler and cheaper to set up, there will be greater costs upon your death as a result of the probate process. However, the cost of probate depends on what assets you have and whether your assets can pass outside of probate with pay-on-death or beneficiary designations.

A Trust comes with the added work of transferring your assets into your Trust, but it allows your trustee to manage your assets upon your incapacitation and is not a public record.

Often, the decision of whether to implement a Will or a Trust comes down to value and the type of assets you have. It is a good idea to review your assets with an estate planning attorney to determine the best plan for you. As your assets grow or your life changes, it may make sense to change your estate plan.

D. SUMMARY

In summary you will hear your lawyer at Cray Law compare Trusts and Wills with three (3) basic factors:

1. COST to get your assets to your loved ones upon death
a. Trusts are less costly long-term
b. Wills are more costly long-term

2. PRIVACY
a. Distribution of a Trust is a private process
b. Wills are administered in a very public manner and all data is accessible on the Court’s website.

3. SPEED of the process to transfer assets to your loved ones upon death
a. Trusts are very quick – often within a matter of weeks
b. Wills can take several months or even years

If you have questions or want to explore options for your estate planning needs, please contact your Cray Law attorney.

Cray Law Firm, PLC
420 N. Roosevelt Ave., Ste. 110
Burlington, IA 52601
(319) 752-4537 – Phone
(319) 753-2712 – Facsimile
Email: [email protected]
[email protected]
[email protected]

By: Mitchell L Taylor, CPA, Attorney at Law