By Shanna N. Yonke
June 14, 2022
Attorney Shanna Yonke addresses this question in her latest video post.
My name is Shanna Yonke and I’m an attorney on Ruder Ware’s Estate Planning Team. One of the most common questions asked by our clients is what is the difference between a will and a trust and which is right for me?
Both wills and trusts are used to direct how and to whom your assets will be distributed upon your death.
Both wills and trusts need to be administered after your death, meaning that there’s work to be done by your loved ones in order to transfer your assets upon your death.
The biggest difference between wills and trusts is probate. Probate is the court monitored process of transferring your assets to your loved ones. If you have a will, your assets will be transferred through probate. Generally, if you have a trust, you don’t need the probate process to transfer your assets to your loved ones.
There are several things that clients don’t like about probate: First, probate delays the administration of your assets. Wisconsin law requires a creditor claim period. During this period, we file creditor claim notices in the local newspapers and wait for unknown creditors to file claims against your estate. The creditor claim period is three to four months after the initial probate paperwork is filed with the court. We can’t finish the probate process until this period has expired. On the other hand, there is no formal creditor claim period in trust administration.
Second, probate requires filing paperwork in the public court records. The probate paperwork requires reporting what assets you owned upon your death, what each asset was worth, and to whom each asset was distributed.
Anyone may obtain copies of the probate paperwork for a small fee. Many clients are uncomfortable with this lack of privacy regarding their personal finances. Trusts allow clients to maintain privacy regarding their personal finances and who receives their assets following their death.
Third, probate requires paying an inventory filing fee to the court. The fee is 0.2% of the value of your probate assets. This fee sounds small, but it adds up quickly. Consider the fee for one of your most valuable assets, for instance your home, by multiplying the value of your home by 0.2%. Alternatively, since the court is not involved in trust administration, there is no fee paid to the court.
If you have questions regarding whether a will or a trust is right for you, please feel free to contact any attorney on Ruder Ware’s Estate Planning Team.
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