More than any other document, a will puts you in touch with your mortality. Perhaps that’s why more than 60 percent of adults in the U.S. don’t have a will!

However, if you care about what happens to your property after you die — more importantly, if you care about providing for the loved ones you leave behind — you need a will, and possibly a more extensive document called a trust.

The benefits of a will

Even if you die without a will, some of your assets will end up where you’d want them to go. If you’re married, property titled in both of your names with rights of survivorship will go to the surviving spouse upon the other’s death. Likewise, assets with proper beneficiary designations will go to whomever you designate. That’s why it’s important to keep ownership and beneficiary designations up to date.

However, for everything else — property held in your name only, including a closely held business; assets without a beneficiary designated; and items without the option of specifying the owner or beneficiary (artwork, jewelry, a coin collection, your grand champion chihuahua) — your state’s “intestate” (a term describing a person who dies not having made a will) laws will determine who gets what.

Consider the possibility of a childless married couple dying in the same accident and neither of them having a will. In some states, if one lived longer than the other — even by just minutes — the parents of the one who lived longer would get all of the property.

In some states, if you leave behind a spouse and a child, half of your estate would go to your spouse and half to your child. If the child is a minor, a court would have the authority to name a guardian to manage that child’s portion of your estate. At age 18 or 21, depending on your state, the child would receive his or her portion of the estate with no restrictions.

If you want to leave anything to your church or other nonprofits, you don’t want to use your state’s default plan! You won’t find any charities on its distribution list.

Typically, a married couple will opt for “mirror” wills. If one dies, everything goes to the other and vice versa.

It is all the more important to have wills once you have children. This is the document in which you name a legal guardian for your kids in the event of both of your deaths, and you specify who will manage money for your children.

The benefits of a trust

If you’re young, don’t have kids, and don’t have a large estate, a will alone may be sufficient. However, once you have children and a larger estate, a trust may be in order — typically a revocable living trust. A trust does not replace a will; it is used in addition to a will. Here are some of the main benefits of a trust.

  • A trust keeps your estate out of probate.
    Probate is a court-supervised process of distributing assets after death that is required if you have a will only. The process can take a year or longer, and it can cost between 2%-8% of the total value of the estate for attorney’s fees and court costs. With a trust, probate is not necessary, potentially saving your heirs much time and money.
     
  • A trust keeps information private.
    When someone dies, his or her will becomes public record. Not so with a trust.
     
  • A trust can give you more control.
    It can be a bad idea to leave a lot of money to an adult child. With a trust, you can dictate when your children receive their inheritance, perhaps spreading the payout over a number of years. You also can arrange for someone else to manage the inheritance for them and approve spending decisions. Some of this can be accomplished with a will. However, the time and effort needed to add this to a will may make its overall cost comparable to a trust, and with the other benefits a trust provides, you may find it worthwhile to opt for a trust.
     
  • A trust can help in special circumstances.
    If you own a business or out-of-state real estate, have a special needs child, are in a second marriage, want to leave more of your estate to one child than another, or want to place controls over a spendthrift beneficiary’s use of inherited money, a trust can help you manage these situations more effectively than a will.

Formerly, a prime benefit of a trust was that it could help minimize estate taxes. However, high current exemption thresholds ($5,430,000 in 2015, or twice that for married couples) along with the portability of one spouse’s exemption to the other (when one spouse dies, the other can use any of the first spouse’s remaining exemption), means trying to minimize taxes is less of a concern.

A trust typically will cost between $1,000 and $3,000 to set up vs. less than $1,000 for a will. However, because it helps you avoid the potentially costly probate process, a trust could end up costing less in the long run.

Too many variables exist to say definitively if you need a trust. At the very least, be sure you have a will. Then, consult a trusted estate-planning attorney to see if a trust offers value for you.