Do you really need a will if you have a trust?

Taking that first step to make an estate plan often comes with questions. Which is better, a trust or a will? I want a will, do I need a trust? Do you really need a will if you have a trust? I do not have a lot of assets, do I even need to look at a trust versus a will in Florida? Or, who needs a trust instead of a will?

First, keep in mind that these documents have different names. Therefore, they have different purposes. One does not replace the other. This is a key point in estate planning. Secondly, for estate planning purposes, the will is a document that has a limited life span. It governs a legal process that occurs for typically six to twelve months. But the trust can govern how a person’s assets are managed for many years after they have passed.

These are all great questions. In truth, many Floridians benefit from having both a will and a trust, no matter the size of their estate. Generally speaking, the purpose of both wills and trusts is to create a plan, before a person’s passing or incapacity, for the distribution of the person's assets, the resolution of debt, and continued care of dependents such as minor children and pets. While trusts and wills both deal with the distribution of a person’s legacy, and the two instruments can overlap in asset management, each instrument is best suited for certain types of assets. To only have a will or only have a trust can mean a failure to provide for the management of part of your legacy.

A good place to start when understanding why a solid estate plan involves having both a trust and a will is reminding ourselves what each instrument actually is. The Florida Bar explains that a will is a written document, signed by the person whose will it is, the testator, and witnesses. The will controls how the testator’s property is shared at their death. In Florida, if a person dies without a will the law determines the distribution of their property. It is important to remember a will is not limited to things like money and bank accounts. Wills can also provide for guardianship of children and pets.

Executing a legal will gives your wishes and desires a voice when you can no longer speak for yourself. Florida law establishes the way a person’s estate is to be distributed upon their death. A will allows a person to deviate from the law. All of this happens when the will is probated, a public process that can take six months to a year in Florida. This means your assets become part of the public record. A will is also subject to challenge. Potential heirs can contest a will in court, arguing the document does not reflect your true wishes.

In contrast, trusts are a private distribution of assets. There are many kinds of trusts in Florida, each with its own specific purpose. Generally speaking, trusts are commonly used as a means of estate and financial planning to avoid probate and protect assets from misuse, creditors, divorce, and taxes. In Florida, a trust should include things such as real estate, brokerage accounts, non-retirement financial assets, pet custody and care, and business interests. Retirement accounts, vehicles, boats, cash, daily banking accounts, personal property, and the guardianship of minor children are not best managed by a trust.

Trusts also allow for the staggered release of assets, whereas wills create a single transfer. People are most commonly aware of trusts that release funds to children as they age, with 18, 21, 25, and 30 being common ages for releasing funds. This is done to try to ensure the beneficiary does not spend the entire inheritance at once.

Additionally, a trust can be set up to manage your assets during your life, should you become incapacitated. Conversely, wills only come into effect after you have passed. Establishing a trust does mean transferring control of your assets to someone else. This means you need to carefully select your trustee to avoid things such as asset mismanagement and late tax filings which could reduce the value of the trust.

As you can see, wills and trusts serve as a complement to each other, each having their own strengths and weaknesses. Many Florida residents opt to create a trust and a will called a pour-over. In this scenario, upon the person’s death assets not transferred to the trust during their life can be added to the trust after death. With the correct combination of use, a trust and a will can limit tax implications of your estate, protect assets from creditors and bad actors, ensure the care of loved ones and companions, pass sentimental items and collections, and ease the process of wrapping up a person’s legacy.

Take the Next Step with Confidence

Karen Estry can help you identify the entirety of your estate and help you devise a plan that best fits your needs. Providing for loved ones, limiting tax and creditor exposure, and protecting your privacy are just some of the factors to consider when planning your legacy.