What percentage of people choose to have living trusts versus wills?

On Behalf of | Aug 7, 2023 | Estate Planning

In estate planning, two essential testamentary documents often come into play: living trusts and wills. These legal instruments give individuals control over their assets and the distribution of their wealth after their death.

How do people choose between these two options?

Factors influencing the choice between living trusts and wills

While 67% of Americans acknowledge having an estate plan is essential, only 33% of adults have documented their end-of-life plans. Among the reasons for hesitation is that many believe that they have nothing of value to leave behind when in reality, an estate plan can be tailored to suit each individual’s unique set of assets and circumstances.

The complexity of someone’s assets can significantly impact the choice between a living trust and a will among the Americans who choose to create an estate plan. If an individual possesses multiple properties, businesses, valuable investments or complex financial arrangements, a living trust may be particularly appropriate.

Living trusts help provide a mechanism for seamlessly managing assets should the grantor become incapacitated. The appointed trustee can step in and manage the trust without needing a court-appointed guardian. This aspect can be particularly attractive to individuals worried about their ability to manage their affairs later in life.

On the other hand, individuals with straightforward and modest estates may find a will sufficient for their needs, particularly if they are not too concerned about probate. Statistics show that in 2021, 75% of end-of-life plans were wills, and only 18% were trusts. This could be because living trusts typically require more upfront costs to set up. This is even though trusts can save beneficiaries from the financial burdens of probate in the long run.

When choosing between living trusts and wills, there is no one-size-fits-all answer. Each option has its advantages and disadvantages, and the choice should be based on a thorough evaluation of one’s estate, preferences and goals.