If you live in Texas and you are creating an estate plan, you might wonder about the difference in a will and a trust and whether you need both or just one of them. It is important to understand the function of each so that you can make an informed decision.
What does a will do?
In its most basic form, a will can name the people that you want to be the beneficiaries for your assets. If you have a fairly straightforward estate, a will may be all that you need. While you can use trusts and other vehicles instead of a will, there are two reasons a person might want to have a will alongside a trust. One is because a will can name guardians for your children, which you cannot do with a trust. The other reason is because you might want to use it as what is often called a “pour-over will.” A pour-over will can place all remaining assets into a person’s trust on their death even if they have not already moved those assets into the trust.
What does a trust do?
Trusts are powerful documents that can perform many different functions. Unlike wills, they pass assets directly to beneficiaries and do so privately. They can also protect assets from creditors and taxes, manage assets for loved ones with special needs and fund charities among other functions. Wills and trusts can both be useful performing different functions in estate plans.
If you want more control over when and how your assets are distributed or you have particular concerns, such as providing for children from current and previous relationships, a trust may be the way to go. However, a will can be an economical choice for adults whose estates are not complex.