Should I use a Will or Trust in my Estate Plan?

Before addressing the differences in these plans, it is important to point out what they both provide. With either a trust-based plan or a will-based plan, each client will receive a will, a living will (also known as an advanced directive), financial and medical powers of attorney, a HIPAA release, a directive for disposition of last remains, and a personal property memorandum.

With a trust-based plan, each client would receive their “Will” in the form of a Pour-Over Will. This is a Will that acts as a catchall to “pour in” anything that is not owned by the Trust into ownership of the Trust at the client’s passing. Further, with each trust-based plan, a revocable living trust is created.

A revocable living trust is created with the client becoming the original Trustee, meaning they can change the terms of the trust at any time while they are alive. Another benefit to a trust-based plan is that anything within the ownership of the Trust at the client’s passing will be distributed outside of probate court.

This is one of the key differences between a Will and a Trust. With a Will, the client’s house, cars, and other assets will likely have to go through the probate court to be distributed. Meaning, your nominated personal representative will have to open up the case in probate, allow 4 to 12 months for any creditors to make a claim against the estate, take an inventory and accounting of the estate, pay valid creditors of the estate, and finally distribute the remaining assets according to the Will.

With a Trust, many of those steps are skipped and the successor trustee still must take an inventory and distribute according to the Trust document but they are not subject to the creditor period or other probate rules. They also do not incur the court filing fees.

Which plan is best for you? Here are a few questions to think about:

Do you have minor children?

Do you own real estate?

Do you own real estate outside of Colorado?

Do you have assets that you want to distribute along with specific guidelines for how that asset will be used?

If you answered yes to any of these questions a trust-based plan may be the better fit for you.

Minor children cannot inherit through a Will, meaning a Trust would have to be set up for them if they were still minors at your passing. A less complicated way to address that issue is to create a Trust instead, and your successor trustee would then hold their share in the trust until they are of age to receive their distribution.

For real estate, if you only own one house in Colorado, you could still be okay with a will-based plan, but that house will have to go through probate. If you want to take the hassle and financial burden of probate out of your family’s hands, a Trust can help with that.

Similarly, if you own real estate outside of Colorado, a trust is a good idea. For example: if you own a house in Colorado, but also have a home in Kansas, at your passing each of those homes would have to go through probate in their respective states, but if they are under the ownership of your Trust, they will avoid probate and be distributed according to the Trust outright.

In most other circumstances a will-based plan will do exactly what you need it to do, and probate in Colorado is not a strenuous process if there is a valid Will. Whichever plan is better for you, an estate plan is still worth creating. We would be happy to answer any questions you may have and will help guide you on what plan we think works best for you. Give our office a call today to set up an initial consultation at only $200. If you end up signing on with us to create your plan that consultation fee will be attributed to the plan of your choosing.