Two documents related to the estate planning process that are discussed most frequently in popular culture are wills and trusts.
If you are getting ready to craft an estate plan, you may be wondering about these two consequential legal resources. Do you need both of them or will either one do? What’s the difference between the two?
One is necessary and the other is optional
Everyone should have a will. It is a legal document that everyone should have in place. Even if you choose to transfer your assets upon your death via a trust, your will should reflect preferences on issues as varied as burial and whom you wish to take guardianship over your minor children. A trust is an optional resource, but it is a recommended legal arrangement that can either take effect during the lifetime of the trustor, or after death, depending on the type of trust in question
Wills are only effective upon the death of their creators. Certain trusts, on the other hand, are something you can choose to set up and operate while you’re alive in order to facilitate certain financial, property transfer and/or taxation goals.
A living revocable trust, for example, allows you to have the benefit of all your property and assets during your lifetime but when you die, they pass directly to your beneficiaries via your trustee. This can help your estate to avoid the probate process entirely, something you cannot do with just a will on its own.
There are different types of trusts available and the one(s) that’s right for you will depend on the assets you hold and the beneficiaries whom you would like to benefit from such an arrangement. For example, you can set up a Special Needs Trust if you’re looking to provide financial support to an individual with a disability without compromising their ability to receive government benefits.
Preparing a will is arguably one of the most important steps in the estate planning process, even if you also opt to set up a trust. Finding out more about your options from a legal professional can help you to make the decisions that are right for you.