Wills and trusts are among the many estate planning vehicles that provide a method for disposing of assets and carrying out your wishes upon death. Oftentimes, the difficult choice is deciding which one of the two, or both, is the most appropriate in order to properly dispose of assets in light of a family’s unique needs and circumstances.
What is a Will?
A will is a signed document that conforms to state law to provide for the distribution of the assets of a decedent upon his or her death. The distribution of assets is carried out by an executor–the person appointed in a will to manage and distribute the decedent’s estate. The process of distributing assets that pass under a will is overseen by the probate court in the county in which the decedent resided. The “probate” process involves varying degrees of cost and difficulty depending on the circumstances. In addition to providing for the distribution of assets, a will can also designate guardians of minor or incapacitated children of the decedent.
What is a Trust?
A trust is also a mechanism for managing the distribution of assets upon your death. However, unlike a will, a trust affords the ability to manage assets during your lifetime, as well as upon death. Trusts come in many different forms and they are employed to accomplish various needs, including maintaining the privacy of your estate, managing assets efficiently, maximizing the use of estate and gift tax exemptions, avoiding probate, and protecting your estate from creditors and unanticipated changes in family circumstances, like divorce.
When a living trust is employed, it is necessary to transfer substantially all of your assets into the trust during your lifetime. This, in turn, allows family members to avoid the cost and hassle of probate. The management and distribution of trust assets is carried out by a trustee, the person who holds legal title to the trust’s assets for the benefit of the trust’s beneficiaries. The initial trustee is often the original settlor, the person who created the trust, followed by a successor trustee upon the settlor’s death or incapacity. Any assets that are not transferred into a trust during the lifetime of the settlor can pass into the trust upon the settlor’s death through a “pour over” provision in the settlor’s will.
What is Right For You?
Every family’s needs and circumstances are unique, thus there is no one-size-fits-all estate plan. The costs and benefits of both a will and a trust should be carefully weighed in order to ensure that the assets you have worked so hard to amass are appropriately protected, that your family is provided for to the fullest extent possible, and that your wishes are properly carried out upon your death. If you have any questions about estate planning or would like help determining whether a will or trust is right for you, we would encourage you to call or schedule an appointment to visit with us.