Do you need a will or a trust?
Almost everyone will need a will. There are some differences between a will and a trust. Whether or not you need a will or trust will depend upon your situation.

A basic will provides for expenses, listsan executor or personal administrator, and provides for specific devises of real and personal property and the residuary of the probate. It will also appoint a guardian for minor children. A will needs to go through probate. A will is subject to claims of creditors and could be contested leading to additional costs. A trust does not need to go through probate. Probate is open record and requires notice, publication, and usually an administrator or executor, and attorney. Some people do not want all their business made public. Also, depending on your state, probate may be expensive. If probate in your state is more expensive than creating a trust, then you may wish to create a trust.

A trust is used to hold property in benefit for another individual. Say for instance you have children that are unable to handle money or a special needs child. In a trust you appoint a trustee to handle the money. Most people do not want their children getting a large amount of money or property when they turn 18 so they set up a distribution schedule or limit the distributions for certain items. For instance, provisions in a trust could have a child receive 1/3 of the property at age 18, 1/3 at age 24, and 1/3 at age 30. The trust could also contain provisions to control the distribution of money. For instance, the trust could only allow distributions for education.

Some people decide to have both a trust and a will. A person can create a revocable trust during their life time. If you own property in numerous states it is good idea to have the property owned by a revocable trust so you don’t need to open a probate in every state. Sometimes people forget to transfer all the property to the trust. So they create a pour over will. If something is forgotten, then the will pours over the left over items to the trust. In these cases, the wills provisions are usually the same. In addition some wills contain trusts called testamentary trust. These trusts are usually created to reduce estate taxes.

Estate taxes are really not a big issue for most people. In fact in 2010 there is no estate tax. If Congress does not act then the estate tax will come back in 2011. It will only apply to estates over $1.0 million. It is expected that Congress will enact a law to set the estate tax exemption at $3.5 million. If you think this situation will apply to your estate, then you should talk to an estate planning attorney.

As any estate plan depends upon your situation, it is a good idea to talk to an estate planning attorney in your state to see what will work for you.