Since at least the time of the Roman Empire, wills have been used to ensure the orderly transfer of property from generation to generation. While the popular image of making a will often involves someone in a grave situation -- on the eve of battle, perhaps, or suffering from a terminal illness -- wills can be drawn up at any time, and they do provide a good way for people to state their wishes regarding who should receive their property after their death.
Pros of wills
Wills have the following advantages over trusts:
1. Simple wills can be prepared quickly when necessary. Even handwritten wills are valid if prepared correctly.
2. Wills allow you the opportunity to name a guardian to care for your children after your death.
3. Wills usually do not require changing names on financial accounts.
4. Professionals often charge a lower upfront fee to prepare wills.
5. Wills can include testamentary trusts that take effect after death to provide for those who need financial oversight, such as minor children, people with disabilities, and people who have lost the capacity to handle their financial affairs.
6. Wills can ensure that a court will supervise the distribution of your assets. That can become an important option if there is family tension or discord.
Cons of wills
Some of the less attractive characteristics of wills are as follows:
1. Wills take effect only at death, thus making it necessary to create other documents to handle situations requiring care during a person's lifetime.
2. Assets that pass by way of a will are potentially subject to probate proceedings, which can be time-consuming and expensive and are open to the public.
3. Creating or changing a will requires following certain formalities. Failing to do so can jeopardize the validity of the will.
4. If you hold property in more than one state or country, having a will may require you to have multiple court proceedings, called "ancillary probate proceedings," in each jurisdiction.
Depending on your wishes and the complexity level of your estate, a will can work well as your primary estate-planning document. However, looking at the attributes of trusts may lead you to make a different decision.
Go back to the beginning for an overview of wills versus trusts.
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Fool contributor Dan Caplinger welcomes your feedback.