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The Differences Between Wills And Trusts

Wills and trusts are fundamental components of an estate plan, however, each serves different purposes. While a will is the most basic estate planning document that determines how your assets will be managed and distributed after your death, trusts can help to avoid probate, minimize estate taxes, and protect assets. Determining whether a will-based plan or a trust-based plan is the best option for you requires the advice and guidance of a trustworthy estate planning attorney.

Wiles Law Firm, LLC, conveniently located in Mount Pleasant, provides comprehensive estate planning services to clients throughout South Carolina. From drawing up wills and trusts to probate and estate administration, our practice is dedicated to helping individuals and families preserve their wealth. When you become our client, we will take the time to understand your objectives and tailor an estate plan so that it best suits your needs.

Should my estate plan include a will?

A Last Will and Testament, or a will, is a crucial estate planning tool, but one that is often overlooked -- over 60 percent of Americans do not have a simple will. While some believe that they don’t need a will because they are not married or don’t have a lot of assets, everyone has an estate, regardless of their family or financial status. This means that everyone needs an estate plan, and there are a number of benefits to creating a will.

First, a will allows you to decide how your assets will be distributed after you die. Without a will, the court will intervene to make these determinations. Your property will be distributed according to the state’s intestacy laws, which prioritizes siblings, children and parents. This means that the wrong people may end up inheriting your property.

With a will, you also get to name a Personal Representative (executor) who is responsible for probating your estate after your death. A Personal Representative is considered a beneficiary and must faithfully carry our his or her duties which includes: paying your debts, filing final income taxes, paying estate taxes (if necessary) and transferring assets to the beneficiaries. Given that an executor can be held liable for mistakes or misconduct, it is crucial to name someone who is capable and trustworthy. By failing to create a will, a surviving spouse or another close relative will need the court’s permission to act as the estate administrator.

In addition, a will is the only way to designate guardians to care for your minor children. If you don’t have a will, the court will step in to make decisions about guardianship and how estate proceeds will be used for caring for your children. By naming guardians in your will, you can make sure that your children will be cared for by individuals who share your values and child-rearing philosophy.

Finally, a will also allows you to make changes to your estate plan while you are alive and well. For example, you can revise the distribution plan so that it matches important lifetime changes in the lives of your beneficiaries, such as getting married, buying a home, having children, and retiring.

Should my estate plan include trusts?

It is a common misconception that trusts are only for the wealthy who have significant assets. In fact, most people can achieve a number of objectives by establishing trusts from leaving a charitable legacy to providing for a loved one with special needs. Basically, a trust is an arrangement in which the grantor (the person making the trust), authorizes the trustee to manage the assets for the benefit of the beneficiaires.

Some common types of trusts include:

  • Revocable living trusts. -- Living trusts can be used in conjunction with a will to fully carry out your wishes. The trust takes ownership of your property, but allows you to continue managing it during your lifetime. These estate planning tools can help to avoid probate, minimize estate taxes, and plan for incapacity. Because a trust is not filed in the probate court, the financial arrangements and your wishes remain private.
  • Special needs trusts -- These trusts are irrevocable and designed to preserve a disabled person’s eligibility for public benefits such as Medicaid or Social Security disability benefits. Because an inheritance could disqualify a special needs individual from receiving public benefits, a special needs trust can be set up to provide income for her/his basic needs while preserving eligibility for public benefits.
  • Spendthrift trusts -- These trusts are typically utilized to protect a beneficiary who is incapable of handling money, susceptible to being taken advantage of, or has a history of poorly managing debt. By providing money to the beneficiary for living expenses or paying those expenses directly, the trust protects the beneficiary from him or herself as well as creditors.
  • Charitable Trusts -- Charitable trusts provide tax benefits through a combination of gifting and charitable donations. In a charitable remainder trust, for example, property is transferred into a trust, another party (typically a spouse) receives income generated by the trust for a set period of time, and a charity in named as the final beneficiary of the remaining trust assets.

Contact our Charleston Estate Planning Attorneys

At Wiles Law Firm, LC, we know that no two estates are completely alike. We have extensive experience preparing wills and trusts on behalf of clients from different backgrounds. When you consult us, we will take the time to understand your circumstances and design an estate plan that helps you achieve your objectives. Please contact our office to set up a free consultation.

Wiles Law Firm, LLC helps clients with their estate planning needs in Charleston, South Carolina and the surrounding areas such as West Ashley, Summerville, North Charleston, Mount Pleasant, and John's Island.

Information on this website is not legal advice. Further, viewing of the enclosed information does not create an attorney-client relationship with Wiles Law Firm, LLC. Matters will be handled by attorneys who primarily practice out of our office in Charleston County located at 852 Lowcountry Blvd., Ste. 101, Mt. Pleasant, SC 29464. M. Emerson Wiles, III is the attorney responsible for this advertisement.

Any result Wiles Law Firm, LLC may achieve on behalf of one client in one particular matter does not necessarily indicate similar results can be obtained for other clients. Please contact a South Carolina estate planning attorney or one of our attorneys with Wiles Law Firm, LLC for a consultation regarding your unique estate plan.

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