Kith & Kin

Should I create a will or a trust?

road sign with two arrows pointing towards wills or trusts

Photo by Pablo García Saldaña on Unsplash

To ensure that your assets are distributed to your loved ones when you die, you would want to name them as the beneficiaries to your estate. In order to do so, you can choose between writing a will or establishing a trust.

Although these two instruments fulfil the same purpose, they function differently so it is best to know which one will work best for your needs.

What is a will?

A will is a document that states how you want your assets to be distributed upon your passing. It allows you to choose an executor to oversee the distribution of your property and gives you the option to name a guardian for your minor children.

What is a living trust?

A trust is a legal arrangement wherein which a person or an institution, referred to as the trustee, holds the property or assets for the beneficiary. There are several reasons for setting up a trust. Because this is effective upon creation, a living trust enables you to manage your assets both before and after death.

Living trust fund vs will

Should you write a will or establish a trust?

With distinct characteristics for each one, the decision to choose a living trust fund vs will can be difficult.

Consider the following factors when you are deciding whether to create a will or a trust:

1. Creation and administration

Will writing is generally straightforward and simple and is one of the primary considerations of most people. You state how you want your estate to be distributed and sign the document in front of two witnesses.

If at a later date, you would like to make changes, you can easily amend your will by adding a codicil or simply writing a new one.

Also, technology has made will writing more convenient and accessible. A simple online search of ‘how to write a will’ will provide you with various results that can include a will writing format that would help you write a will on your own.

On the other hand, trusts are more administratively burdensome because they require the actual transfer of the assets to your trustee. They are also more expensive to set up because they require active management after being established.

2. Scope and jurisdiction

Aside from the beneficiaries to your estate, writing a will allows you to name an executor, a guardian and even a trustee. You can even include funeral arrangement preferences and other conditions that must be fulfilled before your beneficiaries can gain access to their share of the estate.

A trust, on the other hand, is limited to the management and disbursement of assets, so you will not be able to add any other instructions you wish to implement after your death.

3. Passing through probate

Another major difference between the two is that a will passes through probate, while a trust does not.

A probate is a judicial process wherein the court grants the approval for the transfer of a deceased’s person’s assets. The probate, which is typically the executor’s responsibility, can be a lengthy and costly procedure.

4. Privacy

Once entered into probate, the will becomes a public record. On the contrary, living trusts can remain private since they do not pass through probate.

5. Leaving assets to a minor or disabled person

The law does not allow you to leave assets to a minor without setting up a testamentary trust through the will or naming a trustee to manage those assets. However, trusts can be used to safeguard funds for someone who is a minor or who has a disability.

6. Tax savings

Trusts can provide tax savings because the assets placed within an irrevocable trust are not subject to estate tax upon distribution. Just remember that irrevocable trusts cannot be modified after their creation.

Clearly, there are benefits and drawbacks to either option and the decision to choose a living trust fund vs will would depend on your requirements.

In most cases, it will be helpful to have a professional’s advice.

Writing a will without a lawyer or setting up a trust could seem overwhelming. A lawyer will be able to provide you with legal insights into these processes and help you decide on the setup that will work best.

Here at Kith & Kin Law Corporation, we offer expert advice on Will Writing Singapore with the conviction to provide the best approach based on our client’s personal circumstances and needs.

If you would like to discuss more whether you should create a will or a living trust, we are here to help. Get in touch with us today.