Will v. Trust
You’ve worked hard for your money, and it’s only natural to want some control over what happens to your property when you die. Whether you have a large estate or are a person of modest means, there are several strategies to choose from to make sure your assets are distributed according to your wishes. The two main options are a will or a trust. Both options will give you some control over what happens to your property following your death. The right choice depends on your circumstances. When deciding between a trust and a will, consult with a reputable estate planning attorney to determine which is best for you and your family.
First, it is important to understand what wills and trusts are. A will (also referred to as a Last Will And Testament) is a written document indicating how your property will be distributed when you die. A living trust is a document that serves to manage your assets following your death, as well as during your lifetime ( such as if you are incapacitated by illness, accident, or old age). When the trust is created, your assets are transferred to a Trustee who manages this property.
A living trust allows your heirs to avoid probate, which could make your finances a matter of public record. It also enables you to transfer your assets prior to your death, which can help your family avoid estate taxes. A trust is also used by parents with minor children or special needs children who would not be able to manage the assets themselves; in this situation, a trustee will manage the trust until such time as the beneficiary is able to handle it themselves.
On the other hand, a will must be actively managed, as opposed to a will, which only becomes activated upon your death. When you set up a trust, your assets are transferred to the Trustee, and will be managed by the Trustee from that point, rather than after your death. The process of setting up and managing a trust can be more expensive than writing a will.
In addition, the use of a trust can be somewhat limited, as it can only be used to control those assets formally placed into it, rather than all of your property. If your assets haven’t been transferred into it by the time of your death, the trust will be of no benefit. Also, if you have set up an irrevocable trust, then the assets assigned to it cannot be removed from the trust or re-assigned.
Last Will and Testament
A will can be an inexpensive estate planning solution. This document, which only goes into effect upon your death, lays out who receives your property. Unlike a trust, you can change it at any time during your life, or revoke (cancel) the document. Because it only takes effect after your death, it does not need to be managed while you’re still living. Often, it is the best option for people without a substantial estate to pass on to heirs, or whose estate consists mainly of personal property they wish to bequeath to specific parties.
However, there are a few downsides to a will. Once you die your estate is subject to probate, and your finances may become a matter of public record. In addition, your will cannot be used to manage your assets if you are alive but incapacitated, unlike a trust.