This pandemic changed the way the world works. Although a vaccine has been made, the dangers are still there. You won’t know when your time is up. Setting up an estate plan makes sure your surviving spouse, children or grandchildren are cared for. A simple way to do that is with a trust or a will.
How do trusts and wills work?
Before proceeding to the benefits, let’s first get the legalese out of the way.
What’s a will?
A will is a legal document that directs what you want to happen to your estate after your death. Probate is the legal process for proving a will. During probate, the court determines whether the decedent’s will is legally valid and executes it accordingly.
A written will makes probate easier for your loved ones. Consider hiring an experienced estate lawyer who will make sure that your assets go to the intended beneficiaries.
What’s a trust?
A trust is a fiduciary agreement allowing a trustor to arrange how and when assets will be distributed to any beneficiary. The trustor/grantor (you) is the creator of the trust. The trustor would then appoint a trustee to act as the manager of the trust.
A trust is its legal entity, so the assets are generally safer than they would be with a family member. Even a relative with the best of intentions could face a lawsuit, divorce, or other misfortune, putting those assets at risk.
Wills and trusts can go hand in hand. Put assets in a trust so they’re handled exactly how you want them and a will covers what isn’t covered by the trust.
Why get a will?
A will is useful if you want certain belongings to go to specific heirs after you pass away. Disagreements over who gets what delay probate, making the process tedious and expensive. A will legally documents your wishes, which may avoid these disagreements and make probate faster. Small estates may only need a simple will for a comprehensive estate plan.
Benefits of a Will
Comprehensive. A will can cover more than your trust.
Cheap. A will is an inexpensive way to pass on your assets.
Protective. A will lets you choose the legal guardian of your kids.
Convenient. A will makes probate easier and cheaper for your loved ones.
Why get a Trust?
People often think that only; the obscenely rich could use a trust. In reality, a trust can benefit anybody. A trust lets you add instructions for how and when your beneficiaries inherit the assets, giving you better control.
Types of trusts
There are multiple types of trusts, here we cover some general types:
Revocable Trusts
Revocable trusts are created during the lifetime of the trustor and can be altered, changed, modified, or revoked entirely.
Irrevocable Trust
An irrevocable trust is one that cannot be altered, changed, modified, or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the grantor, can take the property out of the trust. It is possible to purchase survivorship life insurance, the benefits of which can be held by an irrevocable trust.
Living Trust
A living trust is one created during the trustor’s lifetime. A successor trustee is named to step in and manage the trust when the trustee is no longer able to continue, whether incapacitated or departed. You designate a successor trustee when creating a revocable living trust.
Testamentary Trust
A testamentary trust is one created through the grantor’s will.
Benefits of a trust
The main advantage is that trusts can avoid the probate process. Doing so provides many benefits as follows:
Gives assets to your loved ones. A probate court might award your assets to people other than your surviving successor. Avoid probate with a trust and ensure your assets go to the right people.
Maintains your privacy. The process of administering your will involves putting it into the public record. Getting a trust avoids this and keeps your privacy.
Avoids the hassle. Probate allows people to contest your will, making it expensive and time-consuming for your loved ones. Avoiding probate makes it easy for your heir.
As mentioned, a trust works well with a will. A pour-over will let you put assets into a trust after death. Some people opt for a testamentary trust. Some create living trusts while alive with instructions from the will to transfer once deceased.
Want to know how to avoid estate taxes? Have any concerns with trust administration? For questions on estate planning law, inheritance tax, wills, trusts, guardianship, conservatorship, power of attorney, or even help on estate planning documents, get only the legal services of true professionals. Contact a law firm whose specialization is wills and probate. Call us at Entrusted Estate and Asset Protection, PC to consult with our experienced estate planning attorney. Contact (248) 621-8406 for details.