You may be planning for your family's future so that they may be taken care of by your estate after you are deceased. You may be considering writing a will, but you should also consider a trust.
A will and a trust are both legal documents that deal with distributing assets to your survivors. However, there are key differences between them. Knowing these differences will help you decide which one is right for your situation.
A will is a document that contains your wishes for how you want your assets to be distributed, and it is validated by your signature and a witness to that signature. It names an executor of your estate who will manage the asset distribution. It names the beneficiaries to your estate and allows you to name a guardian for your minor children. The will must be reviewed by a probate court in your state that determines the document's validity and oversees the conduct of transferring the estate to the beneficiaries. The court also determines how remaining debt is paid from the estate.
A trust is a legal relationship between two people in which one person holds property for the benefit of another. A "grantor" creates a trust, the "trustee" manages the property (or properties) for the beneficiaries of the trust. You can create a trust that holds your assets that can be distributed to your family members after you die.
The most important difference between the will and the trust is that the trust does not have to go through probate court. The creation of a trust involves some significant upfront costs; however, after you pass, your family won't have to deal with probate lawyers and all the time and costs associated with probate court.
When should you choose to set up a trust?
If you have a large estate. Having multiple homes, bank accounts or businesses will complicate the probate process.
If you have special needs beneficiaries. You can place instructions in the trust to deal with their needs more efficiently.
If you are concerned about your family's ability to handle your estate. The trust can include the same kind of instructions a will would include, and your family can avoid dealing with the court and lawyers.
When should you choose a will?
If your state has a streamlined probate process option. Check, or have your lawyer check, state law regarding estates and probate. If your estate is estimated to be worth less than a certain amount of money, it may pass through under a simplified probate process.
If you only have bank accounts and retirement accounts to pass on. Simply fill out the forms that names beneficiaries on the event of your death. The beneficiary will be able to quickly access those assets.
If your real property is owned under joint tenancy.
If you have neither the time nor the inclination to manage a trust.
Consult an attorney in your area to obtain the best advice on how to choose between a will and trust.
Learn how to write a living will, find out what it should include and learn how to make sure your wishes are known. |
Learn the difference between wills and living trusts and how each of these instruments works in your end-of-life planning. |
The purpose of a living will and its importance should not be underestimated. Learn how to write a living will and choose someone as a health care proxy. |
Dying without a will removes a person's rights to decide how assets are distributed. Find out why you should not let this important legal paperwork left undone. |
Learn about the advantages of a living will, including the ability to specify treatments and minimize family stress. |
Researching how to write a last will and testament isn't a topic that most people want to think about, but drafting a will is a necessary part of responsible adulthood. If you've got a family to provide for or children to care for, it's especially vital that you draft a will in the event of an untimely death. |
A living will template can simplify the process of drafting this document, but you still must be specific about your wishes. |
Learn how to write a will that is legally binding. |
The law entitles you to give large gifts without paying taxes. Sound good to you? If so, it is important to know the gift tax rules. |
Get the basics including how to write a will, tips for writing a will, what happens if someone is dying without a will and the importance of living wills. |
A good time for writing a will is after purchasing a home since the nature of your estate has changed. Here's what you need to know. |
Are wills open to the public? Learn who has access to a will and when, and what you can do to protect your privacy. |
