Estate planning involves making important decisions about the distribution of assets and the protection of loved ones after you pass away. If you have yet to create an estate plan, it is best to meet with a lawyer that can help draft up the documents you need for protection. Two common tools used in estate planning are wills and trusts. While both serve essential purposes, You likely want to know when it is appropriate to use a will, a trust, or both documents.
What Exactly Is A Will And A Trust?
A will and a trust are used in different ways that you may not be aware of. A will is a document that specifies how a person's property and assets should be distributed upon their death. It allows you to appoint an executor, name your beneficiaries, and address other matters like guardianship of minor children. A trust is a legal entity that holds assets for designated beneficiaries. It allows for the transfer of assets outside of probate, provides flexibility in managing assets, and can offer tax benefits.
Why Use A Will?
Many people opt for a will when they have very simple estate planning needs. It's common when someone doesn't have many assets or there is only a single beneficiary that will receive anything. A will is also helpful when there are no special instructions that are necessary to carry out your wishes. For example, you may need a will that simply states all of your estate will go to your only child that is over the age of 18.
A will can also be used to decide on the guardianship of a child if both parents were to pass away. It is not something that can be decided with a trust, but it can certainly be combined with a trust in a way that would benefit the child.
Why Use A Trust?
A trust gives you some serious flexibility with how assets are distributed after you pass away, such as providing conditions on when assets are distributed at any time. For example, a trust can be used to appoint an executor of the estate, who then has the responsibility to disperse money to a child that has guardians. This provides a safeguard for the child so that their guardians do not have access to their entire inheritance.
A trust is also a private document that does not become part of public record. This can be used to prevent individuals from being snoopy and seeing what a person inherited since the legal matter is kept private. Meanwhile, all wills go through the probate process and do become public record.
Contact a will drafting lawyer to learn more.
Share19 July 2023
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