Washington residents who wish to begin planning their estate can choose an irrevocable trust or a will. These tools have notable differences.
An irrevocable trust allows you to hold assets beneficiaries inherit in the future. Anything held in an irrevocable trust is no longer yours once you place it within. You cannot change the trust’s terms and must go through the court if changes are needed.
Irrevocable trusts aren’t flexible and you don’t maintain control over the assets placed in them. An irrevocable trust is more beneficial to individuals who are wealthy. Assets placed in the trust can bypass estate taxes and are protected from creditors in the event the creator owes a debt.
A will is a legal document that allows you to state your wishes for things in the future. You can choose beneficiaries who will inherit your assets and property, name guardians for your minor children and name a person to handle your estate once you’re gone. You can also describe how you want your final arrangements to be handled. A will can be changed if circumstances require it. For example, if a beneficiary decides they don’t want to inherit from you, you can name an alternate in their place.
The biggest difference between an irrevocable trust and a will is that the trust cannot be changed while a will can be changed. A will can also be contested, but a trust is less likely to be contested.
A will doesn’t offer the same protections as a trust. For example, everything is made public with a will. A trust maintains your privacy. Trusts can protect you from estate tax while a will doesn’t do that.