Everyone knows they need an estate plan, but not everyone knows all of the legal documents which are part of an estate plan and what each document covers. Understanding your estate planning options requires a discussion with a trusted estate planning lawyer, like an estate planning lawyer. He or she can help you decide what your best path forward is for your estate plan and to show you the difference between wills and trusts.
Wills and Trusts: Defined
A last will and testament is a legal document laying out what you want to have happen to your assets and your belongings after you are gone. A will also appoints a person called an “executor” or “personal representative,” whose job it is to ensure that your wishes, as laid out in your will, are followed. A will only become effective once you die.
A trust is also a legal document which lays out what you desire to have happen after you die. However, a trust becomes effective the moment you sign it. You assign a trustee to manage the trust and distribute the funds according to your wishes. You can be the initial trustee.
Benefits of a Will
A will offers many benefits as part of your estate plan. Having a properly drafted will, you can ensure that your loved ones receive the items you want them to receive. For example, you can leave your china collection to your niece and your baseball card collection to your son.
Without a will, you cannot guarantee that these specific items will be given to these specific people. When you die intestate, which is without a will, the court will determine who gets what based on your bloodline. So if your spouse survives you, they will get everything. If you have no spouse but you have two children, they will split everything equally. The court will take a hefty fee for doing this service, which is why it’s so important to make sure you have a will as part of your full estate plan.
Benefits of a Trust
Trusts are more complex to create, but that does not mean they are more expensive. A will must pass through probate court, which means it can take time and money to distribute your assets according to your wishes.
A trust, however, avoids probate. When your trust is properly set up, your assets will change the title from your name individually into the name of the trust. The result of this is that when you die, your trust owns your assets, not you. This way, the trust holds the property and can distribute as you desire.
Distribution from a trust does not have to take place all at once, either. Unlike a will, you have more control over trust assets. Maybe the niece you want to leave your china collection to is only seven. You can condition her receiving the china collection upon her turning sixteen or graduating high school. The same with the baseball cards to your son. With a trust, you have more power over a longer period of time.
Wills and Trusts Work Together
The best part about wills and trusts is that you don’t have to choose one or the other. Both wills and trusts can be part of your estate plan.
Because most people draft their estate plan well in advance of their passing, they may acquire more property and more belongings they want to distribute. In this instance, you would want a pour-over will which, upon your death, leaves all of your assets to the trust. Then the trust takes over and distributes everything in accordance with your wishes.
See an Attorney Today
When you meet with a skilled and experienced estate planning attorney, you can rest assured your wishes and desires will be met. He or she will give you the guidance you need to ensure you have your estate plan drafted properly and that it conveys your wishes about how your assets should be distributed.