If you are just getting started thinking about an estate plan, the document that is likely to be the first to come to mind may be a will. A will is a basic legal document which explicitly spells out to whom you’d like your money and other assets to go when you die, as well as guardianship wishes for children or pets.
For some, a last will and testament may be sufficient. However, their beneficiaries will still be required to go to Probate Court – a long and public process – to facilitate the distributions of those assets upon your death.
Luckily, there is another option that can be used to keep your estate out of Probate – a trust is a more detailed document that outlines precisely what management and distribution of your assets will look like, and allows you to appoint a trustee who will act on your behalf when it comes time to distribute those assets.
Trusts and wills achieve similar goals, such as the designation of beneficiaries, who is to administer the estate, specific amounts or items to be distributed to people or charities, and the handling of any special clauses, issues or specific wishes.
Trusts, however, provide additional benefits that wills do not – namely, the ability to avoid Probate Court, as it outlines precisely how the distributions of assets should be administered upon your death. More perks include:
- Reduction in estate taxes
- Protection of privacy for your estate
- Planning distributions over time for a minor or other beneficiary who has special needs or is on public assistance
- Simplification of estate administration when you own property in multiple states
Another significant benefit you’ll get if you have a Revocable Trust, which is the most common form of a trust, is that the terms of your trust can be changed while you are still alive. A Revocable Trust is a legal agreement that describes exactly how your assets are held in your trust, how they are invested and distributed both during and after your life.
You may be thinking that you don’t have enough money to put into a trust, but if you have any assets to manage, you could benefit from having a trust. Trusts are also especially beneficial in certain circumstances, such as planning for:
- Management for complex assets (i.e. businesses)
- Succession planning for business owners
- Fair distribution for blended families
- Care for beneficiaries with special needs (without impacting their government benefits)
No matter your situation, the document you choose to use for your estate plan should consider your personal, financial, professional, and philanthropic wishes. For questions on estate planning or how to get started, click the button below to contact our office – Cona Law will be happy to help.