Be it money, real estate, cars or other personal belongings, you’ve worked hard to earn your assets and naturally want to know they will be taken care of when you leave this earth. A will is the most common tool people know of to retain some control over how their belongings are distributed after their death, but more people are looking into the value of trusts. Each of these estate-planning tools has unique pros and cons and it can be challenging to know which one is right for you. An estate planning lawyer can help, but in the meantime, here’s a little background on each that can help making a choice easier.
Understanding a Will
Most people have heard of a will and have a general idea that it dictates what will happen with your assets after your death. But wills are not always as simple as TV or movies make them out to be. A will has to be signed and witnessed, it is revocable – which means it can be cancelled – and is subject to being amended. Finally, it goes beyond just distributing goods and lets you set up arrangements such as establishing a guardian if you have minor dependents.
Understanding a Trust
A living trust differs in that it is more flexible in some ways, more rigid in others. Like a will, it details asset management in the event of your death. A living trust also extends to asset management during your lifetime, for instance if you are disabled, it would allow a trustee to manage your assets. Because the trustee is able to manage things, a court doesn’t have to get involved to supervise distribution of your assets.
Why Not Choose a Trust?
In many ways, a trust sounds like the way to go. Properly funded, among other things, it can let you
- Avoid probate on your assets
- Plan for your own incapacity
- Easily manage any size estate
But there are a few inconveniences. For one, it costs more to set up a living trust because it has to be managed. Assets have to be formally placed into the trust and if you die before this happens, unprotected assets will still be subject to probate and even state estate taxes.
Planning for your assets after your death is wise but knowing whether a will or a trust is the right choice can be tricky. Contact an estate planning attorney today to help guide you to the best outcome.