Estate Planning and Your Options

By Tori Reese

Estate planning is often something many people overlook, and something many people know very little about. When people begin to start looking into estate planning many will see the terms “will” and “trust” being used. Understanding the difference between the two will not only make estate planning easier but also help you in determining which options will be right for you. A will or a trust is used to distribute any assets you may own upon your death. Both tools allow you to name beneficiaries who will receive your assets and fiduciaries to control the distribution of said assets. However, there are some important and key differences between a will and a trust that one should consider before even beginning to estate plan.

Up front, wills usually cost less money to draft, however a will must go through probate upon your death. This can often be costly and takes several months, at least, to distribute your assets to any beneficiary. It is important to note, however, that not all assets you own will go through probate. Accounts with a pay-on-death designation or beneficiary designation will pass outside the probate process, regardless of whether you have a will or trust in place. While a trust is usually more expensive to draft on the front end, and you will have to transfer all your assets into your new trust, it will act as a separate entity. This can lead to less costs being incurred down the road. Another key difference is the effective date of each instrument. A trust is effective upon the moment the agreement is signed. This means that in the event you became incapacitated while living, a successor trustee, named in your trust, could control your assets for you. An executor of a will cannot and will not have control over your assets until you die.

Lastly, in Iowa, a trust is private while a will is not. This means upon your death; your will must be filed with the court. Any assets you have and to whom you plan on giving them to will be made a public record. This is not the case with trusts, as trusts do not go through the probate process. Reviewing your options with an estate planning attorney is always the best course of action as they will be able to give you advice based on your specific and individual assets. Ultimately, making the decision between a will or a trust is up to you but having a clear understanding of both will aid in making that important decision.