Question: This year I am finally going to take care of my estate plan. Do I need a will, or a trust, or both? What is the difference between the two documents?

Answer: You are not alone. My office is well underway scheduling appointments to assist others in making new years resolutions come true in 2008. While proper advice requires a consultation, allow me to explain these documents, their differences, and compare them with the unattractive alternative of dying without an estate plan.

An estate plan allows you to legally state your intentions about who will manage your assets, after you die; who will ultimately receive your assets; and who will raise your minor children. Those who neglect their estate planning, essentially leave these important decisions up to the Massachusetts legislature. This is the same group of decision makers who brought us the Big Dig.

For those who choose to make their own decisions, a last will and testament allows you to appoint people you trust to serve the above roles and lists the names of people or entities to benefit from your estate. So does a trust. The primary differences between the two documents lay in the procedure and flexibility involved.

Regarding procedure: consider a will as a public document as opposed to a trust which is essentially private. Through a will, you name an executor to handle your estate. However, the probate court must sign off on your appointment. This requires a formal legal proceeding which can take time and cost money. With a trust, you are privately bestowing decision making responsibility upon a trusted person. On the day of your death, the trustee takes control over assets owned by the trust. No legal proceeding is required after death, saving your estate time and money.

Regarding flexibility: picture the difference between a quarterback passing the ball versus running the ball. When Tom Brady throws a ball, he loses control of it and relies upon his receiver to make decisions. This is similar to a will, where you give property outright to a relative or loved one. After they acquire the property, they can do anything with it, including losing a large portion through divorce or subsequent deaths.

With a trust, you become more like Tom Brady running the ball: you retain the power to make decisions. Rules can be added to a trust, which will keep assets in your family bloodlines, despite divorce or subsequent deaths. Other rues can be added to help you to avoid estate tax or Medicaid estate recovery for long term care.

Either a will or trust creates a better situation for your surviving family members. For a little extra money, you can write a trust which makes the process smoother and more convenient for them.

Attorney James Haroutunian’s practice focuses on estate planning, real estate and small business formation in Billerica at 630 Boston Road. Contact him with questions at 978-671-0711 or email him at james@hlawoffice.com.