Do you need a trust or a will? Or both?

It’s no surprise that people would rather do things that make life enjoyable – such as listening to music and watching movies (maybe not fasting, though) – than be forced to think about the end of their lives by drafting a will or creating a trust.

But having an estate plan truly is a gift to those you leave behind. And everyone should have a plan for how they want their assets distributed and managed after they are gone – not just the wealthy.

A will isn’t the only way, though, to spell out who gets what when you die. A trust is another estate planning device you can use to pass on your assets. The question, then, is which one is the best option for you.

Reasons to have a will

Everyone needs a will, says Rebecca Neale, an estate planning attorney and owner of Bedford Family Lawyer. “You need a will because life is complicated,” she says.

But isn’t a will about planning for when you die? Actually, it is a plan for distributing what you will leave behind to loved ones who still are living. And things can get complicated for them if you die without leaving a written plan for your assets – even if you don’t have a lot of assets.

A will lets you decide who gets what

You might assume that you don’t need a will because you don’t have much and your family members can simply sort out who gets what. The problem with that approach is that your family won’t get to decide who gets what. A judge will decide based on the intestacy laws of your state – laws that determine how property is distributed when someone dies without a will.

Intestacy laws vary by state, but, typically, property is split among heirs. You might not want your property divided equally among your children. If you don’t have children, you might want a cousin to get everything rather than your siblings.

Bigger problems can arise if you live with someone but aren’t married, or if you have stepchildren. Intestacy laws typically divide property among a surviving spouse and blood relatives. If you die without a will, your domestic partner or stepchildren might not get anything. You might think of your stepchild as your own child, but that “child might not inherit the home they live in if you don’t write a will that leaves the home to them,” Neale says. “A long lost relative could get that property even if you’ve been sharing it with someone.”

A will lets you name a guardian for your children

If you have children under the age of 18, you need a will to name a guardian – someone to care for them if you die while they are young. You also can name a guardian to manage the assets you leave behind for your children. You cannot use a trust to name a guardian.

Just as a judge can decide who gets your property if you die without a will, so will a judge decide who gets your children. “Even if you can’t find the perfect guardian, your opinion about who the best person will be is better than a judge’s opinion,” Neale says. That’s why it’s so important for parents to have a will that names a guardian (and a back-up guardian) for their children.

If you and your spouse can’t agree on whom to name, Neale says that it’s OK for each of you to name a different person in your wills. “If both parents die at the same time, then you have two good options, and it will get figured out between those two options,” she says.

A will lets you specify your final wishes

Because the end of life can be a very expensive process, you should let your loved ones know what your final wishes are, says Cody Barbo, co-founder and CEO of online estate planning service Trust & Will.

A will lets you spell out your final wishes (a trust does not).

You can specify whether you want to be buried, cremated, placed in some other sort of final resting place or have your body donated to science. You can detail whether you want a celebration of life or a somber funeral. Putting your wishes in writing will make things easier for your family. And it could save them money if you let them know you don’t want an elaborate funeral with an expensive casket and headstone.

How to create a will

Ideally, you should work with an estate planning attorney to create a will that is specific to your situation. Plus, the attorney will ensure that you take all of the necessary steps for the will to be valid – such as signing it, having witnesses to your signing and having it notarized.

Lawyers can charge anywhere from a few hundred dollars to more than $1,000 to draft a will along with other essential estate planning documents. Neale says she charges $900 for a will, power of attorney and health care proxy documents for an individual and $1,200 for a couple. The latter two documents let you name someone to make financial and health care decisions for you if you cannot.

There are more affordable options available online. An individual will is $159, and a couple’s will is $259 from Trust & Will. The couple’s version includes two comprehensive legal wills. The will includes a section where you can spell out your final wishes, down to the songs you want played at your funeral. Trust & Will mails a bound copy of the will you create online and includes state-specific instructions on how to make the will legally valid. However, residents of Indiana and Nevada can sign their wills digitally and have them notarized digitally. This option also will become available for Arizona and Florida residents this year, Barbo says.

Haven Term policyholders can access an individual or joint will at no cost from Trust & Will through the Haven Life Plus rider. Trust & Will also is available independently of the Haven Life Plus rider, as a paid service.

When you create a will, you need to name an executor. This person will oversee the distribution of your assets, settle any outstanding debts, pay any final taxes, close accounts and handle other financial tasks. You should have a conversation with the person you want to fill this role to make sure they’re willing to be your executor. And you should create a list of your assets to make it easier for the executor when you die.

Reasons to have a trust

Because everyone needs a will, but should have a trust in addition to a will?

A will goes into effect after you die. A trust, on the other hand, takes effect when you create it. It does allow you to transfer assets to heirs when you die, but you must transfer assets to a trust while you are living. That can involve changing the title on property deeds from your name to the trust and filling out forms with your financial institutions, Barbo says.

There are a variety of trusts that can accomplish different estate planning goals. One of the most common is a living trust, which allows you to maintain control of your assets while you are living. Most living trusts are revocable, which means you can make changes to them during your lifetime. An irrevocable trust can’t be changed.

Whether you should establish a trust depends, in large part, on your financial situation and in which state you live. The following are a few key reasons you might want a trust. However, you should consult with an attorney or financial professional to discuss the pros and cons of a trust.

A trust gives you more say over when heirs get your assets

One of the main reasons to have a trust is if you want to have more control over when your heirs will get what you leave behind to them, Neale says. For example, you could stipulate that your children don’t get any or all of the money you leave behind until they’re, say, 21 or 25 years old rather than 18 – which is likely when they would get it in the absence of a trust with a timeline for the distribution of your assets.

A trust avoids the probate process

Probate is the legal process of distributing property after someone dies. Even if you have a will, your estate has to go through probate. But a living trust allows all assets in the trust to avoid probate – which can save your loved ones time and money.

The probate process varies by state but can take an average of six to nine months, according to the American Bar Association. The cost of court fees and attorney fees associated with probate also varies by state. In some states, such as California, the cost of probate can be high because attorneys can charge a fee of up to 4% of the value of the estate, Barbo says. So having trust can make sense if you have a large estate in a state with a lengthy and expensive probate process.

Be aware that some assets, such as life insurance and retirement accounts, bypass the process if you’ve named beneficiaries for those accounts. And accounts designated as payable on death can be transferred to beneficiaries without going through probate. If you don’t have many other assets beyond a house, the cost of creating a trust just to avoid probate might not be worth it.

Even if you’re in a state where the probate process is simple, you still might want a trust to protect your privacy. A will becomes public record when it goes through probate, but Neales says that a trust is never made public.

A trust can help avoid estate taxes

You’d have to have quite a large estate to worry about the federal estate tax. Estates worth up to $11.4 million can be passed on without being hit by the estate tax in 2020. However, the threshold is much lower in some states, such as Massachusetts, where Neale is located. Estates worth more than $1 million can be subject to a state estate tax in Massachusetts, she says.

Certain types of trusts can be set up to shield assets from estate taxes. If you live in a state with a low estate tax threshold, a trust can make sense – and it can make sense to make a trust the beneficiary of a life insurance policy if the payout is large enough to push the value of your estate over estate tax limits. However, it’s important to work with an attorney to make sure the right type of trust is used and assets are transferred correctly, Neale says.

A trust can be used for long-term care planning

There could come a time when you no longer can make financial decisions on your own or care for yourself. A trust can help if a situation like that arises. When you create a trust, you must name a trustee to manage the assets in the trust. If an injury, illness or dementia leaves you unable to make financial decisions on your own, the trustee could easily manage your finances for you. However, you can achieve the same thing with a power of attorney document that names someone to make financial decisions for you if you can’t.

But a trust allows you to shift assets out of your name so you can qualify for Medicaid, which will pay for certain types of long-term care. You might want to consider this if you can’t afford long-term care insurance, but your assets top the requirements for qualifying for Medicaid, Neale says. You should work with an estate planning attorney who specializes in Medicaid planning to do this, she says.

How to create a trust

An estate planning attorney can create a trust for you, but it will cost significantly more than a will. The minimum Neale says she charges for a trust is $2,900.

There also might be costs associated with changing the title on deeds for property that you want to transfer to the trust.

Trust & Will offers an individual trust for $599 or $699 for couples. Haven Term policyholders can receive trust services at Trust & Will for no cost if they don’t make an online will. Or, they can upgrade from a will to a trust for no cost.

Choose the estate planning option that is right for you

A trust isn’t right for everyone. But everyone should have some sort of estate planning document, Barbo says.

Like life insurance, estate planning will give you peace of mind and make things easier for those you leave behind.