As you probably know, there are two types of estate planning documents — wills and trusts. There are many differences between these two documents and how they serve to protect your loved ones after you’re gone, so it’s important to understand which one works best for your family and your situation. This guide can help you decide whether a will or a trust is right for you when it comes time to handle your estate planning document.
What is a will?
A will is a legal document that gives an individual the ability to choose how their property and assets should be distributed upon their death. A beneficiary on a will can be any person, trust, charitable or non-charitable organization(s). Upon death, a will must be probated in court before any beneficiary can receive their share. Probate is a process of proving that the will is valid.
However, without a will, a person’s property will pass by intestacy. This means the person’s property will be distributed in probate court according to state law rather than their wishes.
If you’re giving more to certain people than others, this could lead to conflict in your family. If this is something that worries you, then a trust may be a better option for dividing up assets among family members.
What is a trust?
A trust is a legal document that allows someone to transfer property to beneficiaries without going through probate. Most trusts are classified as either revocable or irrevocable, each of which have pros and cons to consider before deciding on the best course of action. A revocable trust offers the grantor more flexibility and control while an irrevocable trust does not. However, an irrevocable trust offers greater protection over your assets against creditors. An estate planning attorney at our firm will recommend which trust is best suited for your specific situation.
Do I need a trust and a will?
If you are starting to plan your estate, we recommend having a will at a minimum. You want to be able to choose where your property goes and who gets to inherit it. Additionally, if you want to avoid probate on some or all of your assets then we would advise creating a trust. Probate can be very costly and time-consuming.
For example, if you put your house to be held in trust, the trustee will have the ability to sell the property or retain control of the property for the benefit of your beneficiaries immediately.
There are many other advantages to creating a trust such as minimizing taxes, protecting against creditors, and so on.
Our goal in estate planning is to reduce the amount you pay in taxes and provide a personalized estate plan for the distribution of your property to your beneficiaries.
