What is a Will?

A will may be one of the most commonly used items in the world of estate planning. A will can designate who your beneficiaries are, how you would like your assets distributed, and more. Some key components are stipulating your wishes for the end of your life, clarifying who is to care for any dependents you may leave behind and more.

Some of the most appealing characteristics of having a valid will in place are:

  • You can determine who gets what and keep your assets out of the hands of those who may not utilize them well or will squander them.
  • You get to be in the driver’s seat for all decisions rather than the state. This control can be especially important if you have dependents.
  • Your beneficiaries and loved ones will be able to access your assets quicker with an enforceable will in place than without.
  • You can stipulate donating to charities or other causes upon your death.

What is a Trust?

Another common item used in comprehensive estate plans is a trust. A trust is an arrangement that allows for protection against creditors, minimizing estate taxes and other benefits.

By placing your assets in a trust, you can typically minimize or eliminate the need for probate. Probate can be a lengthy and costly process that your loved ones will have to endure following your death. The assets within a trust are typically not susceptible to this process, saving your loved ones money and time during a challenging transition in their lives.

Protecting your assets from creditors may be one of the most appealing factors of an effective will. If your heirs have creditor issues, a trust can generally protect them, too. You can also stipulate how and when funds are released so you can add another layer of protection for those beneficiaries who may be less financially inclined.

If privacy is important to you, a trust can help to ensure that your assets are kept private rather than making them susceptible to the probate process, which is public.

If you have a blended family, a trust can play a vital role in ensuring which children will benefit from your assets and which of those you may wish to leave out.

Types of Trusts

There are two main types of trusts. One is a revocable trust, and the other is irrevocable. A revocable trust involves the owner or grantor of the trust to have continued access to their assets while they are alive. If there are expected changes throughout your lifetime, a revocable trust allows you to make necessary changes as life unfolds.

An irrevocable trust can’t be changed. The grantor also won’t have access to the funds within the irrevocable trust. Some of the appealing characteristics of an irrevocable trust are that with an effective one, you can reduce estate taxes for your loved ones after you are gone, protect the assets within the trust from legal judgments or creditors, and, when done effectively, can help provide positive tax benefits.

Other Types of Trusts

A special needs trust is an excellent option if you have a loved one with special needs. With an enforceable trust in place, you can protect assets and allow for continued eligibility for state or federal benefits.

Generation-skipping trusts can allow you to transfer assets to grandchildren or a later generation with little or no tax implications.

A charitable remainder trust allows the grantor to receive funds from the trust for a set amount of time, with the remainder being transferred to a charity of their choice.

Spendthrift trusts provide extra protection against beneficiaries who may squander their inheritance, as you can designate the pace and amount of distributions over time rather than a lump sum payout.

What is the Difference Between a Will and a Trust?

One of the most prominent differences between a will and a trust is that a will only go into effect once you pass. A trust can be in effect during your lifetime and after you pass.

A trust can also help you protect your loved ones from making impactful decisions on your health should you become mentally or physically incapacitated at some point.

Either a trust or a will can help provide clarity for your loved ones. Rather than being left in the dark without understanding your wishes, you can choose to involve them in the process and include their input so they have a clear understanding of your wishes, and fewer questions will arise during an already trying time for them.

Comprehensive Estate Plans Provide Protection Even After You Are Gone

One of the hardest things we may do in life is to face our own mortality. But by doing so and planning effectively, you can provide continued protection for your loved ones even after you are gone. You can ensure that your legacy is protected from those you don’t wish to have access to and help your loved ones carry on with their lives financially while they are grieving the loss of you in their lives.

No two situations are the same, so there is no black-and-white answer to what estate planning tools will be best for you. By working with an experienced estate planning attorney, you can review your wishes in confidence, discuss which options are the best fit for you, and take the extra steps necessary to continue protecting those you love the most.

Contact our office today at (303) 557-2011 to get started.

We look forward to serving you and your loved ones.