If you’re like most people, you want your family to be protected if something should happen to you. Most know some type of estate planning documents are needed, but many often don’t know which documents or where to start. You’ve heard that you need a Will, and some people have talked about a Trust. But what are these?
A Will and a Trust are both types of estate planning documents. They are used to make it easier for your beneficiaries when you pass away by working together to create an effective plan for your family.
What is a Will?
A Will, also known as a Last Will and Testament, allows you to make your wishes known after you die.
Benefits of a Will include the ability to:
- Document how you want your assets to be distributed upon your death.
- Appoint a legal representative to carry out your wishes.
- Name a guardian for your minor children.
There are drawbacks to just having a Will.
First, for assets to be passed on to your beneficiaries, a Will can go through a legal process called “probate.” Simply put, probate is the process through which a judge gives permission for assets to transfer to your beneficiaries. This can be a costly and lengthy process. That’s why it’s important to also name beneficiaries on your various assets, including your retirement and bank accounts, life insurance policy, and house.
Another drawback to a Will occurs when you have minor children as beneficiaries. Minors cannot own property until they reach the age of majority in their state—usually 18 or 21. This means a court will need to appoint a guardian to manage the child’s assets until he turns 18. Once he turns 18, he is given all of his inheritance without restriction—even if he is irresponsible.
What is a Trust?
A Trust is an arrangement where you take assets and property out of your name and put it in the name of your Trust. Don’t worry—you are still the trustee, meaning you still control and manage everything. With a Revocable Trust (the most common type), you can change or revoke the Trust at any time.
What are the benefits of a Trust?
The primary benefit of a Trust is that assets in your Trust do not go through probate when you die. You spell out exactly how you want your estate distributed upon your death without the costly process of getting the courts involved. This makes it easy for your beneficiaries. You name a successor trustee, or someone to take over as manager of your assets. If you are married, your spouse is co-trustee with you and will take over as sole trustee upon your death.
Additionally, families with minor children have flexibility with the timing of their kids’ inheritance. Unlike a Will, you can delay when your kids receive your assets. If you don’t feel comfortable allowing an 18-year-old to receive a large amount of money, you can have them wait until a later age, or even get installments over several years.
Will your family be protected when you die?
Having no plan in place can cause unnecessary confusion, court dates, and costs. Make sure your family is protected by documenting your wishes in a manner that complies with the laws of your state.
We make it easy and affordable to get the documents you want! We partner with a Certified Legal Document Preparer to help educate you and draft your documents. Don’t put this off any longer! Schedule a time with us now to help protect your family.