Should I Make a Will and Trust Part of My Estate Plan?


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Wills and trusts both serve important roles in estate plans. They serve different functions and may be recommended in different situations. Some individuals only have a will while others only have a trust. Others have both. Talking to an estate planning lawyer can help you determine whether to include these documents as part of your estate plan.

Last Will and Testament

A last will and testament is a cornerstone of many estate plans. This is a legal document that identifies who you want to inherit your property when you pass. It must follow certain legal formalities as designated by your state of residence. After you pass away, your will is admitted to probate court and is made public record. The executor of your will is responsible for providing proper notice to your beneficiaries, heirs and creditors. After all obligations are fulfilled, the executor distributes the assets of your estate to the named beneficiaries.

Trusts

A trust is a legal document that explains how you want the property that is transferred to the trust to be handled. A trust provides detailed instructions on how your property should be handled. The grantor makes the trust. He or she names a trustee who will handle the trust funds. This may be himself or herself during the grantorís lifetime.

Advantages of a Trust

Trusts provide a greater degree of control over your assets than a will in which beneficiaries receive the assets outright. Trusts also provide greater flexibility so that trustees can act in the best interest of the beneficiaries. They also allow for greater creativity. For example, they can provide provisions related to a beneficiaryís divorce, bankruptcy or civil liability. Additionally, trust funds can be used to prevent distributions if beneficiaries are using drugs or mismanaging money.

Trusts are also a productive way to manage assets for beneficiaries who are minors. Minors cannot inherit assets directly, so a trust allows them to be owned in the entity of the trust rather than outright. Funds can be used for their benefit, such as to pay for housing, educational expenses and medical expenses.

Trusts can also be used during a grantorís lifetime. This allows him or her to provide arrangements for how his or her property should be used during his or her lifetime. This allows the trust to be used in the event of the grantorís incapacity rather than having to rely on a guardianship or conservatorship.

Advantages of a Will

A will provides clear instructions about how you want your property divided. A will also allows you to name a guardian for your children. Wills are often not very expensive to have drawn up. Having a will in place helps avoid laws of intestacy to dictate how your property is divided.

Hybrid Options

Some estate planning options involve a mix of wills and trusts. For example, a testamentary trust is a trust that is included in a will. It has no legal effect during the grantorís lifetime. It only takes effect after the grantor dies.

Another hybrid option is a pour-over will. This type of will simply ďpours overĒ any property that is owned by the grantor during his or her lifetime into the trust. This provides a catchall in case there is any property that is owned outside the trust.

Considerations

Before creating a will or trust, it is important to consider many factors. One factor is the cost to create the document. Estate planning lawyers may charge a smaller fee for a will, which tends to be a simpler document, than a trust. However, there may be more costs involved with the administration of a will if it is probated. Some states provide a simpler probate process if the estate is worth less.

Another consideration is what the purpose of the document is. Wills are appropriate in some cases while trusts are more appropriate in other contexts.

Additionally, wills are public in nature while trusts are privately administered. If the party does not want the information contained in a legal document becoming public knowledge, a trust provides greater confidentiality.

Contact an Experienced Estate Planning Lawyer

An experienced estate planning lawyer can discuss your goals and determine which options are most appropriate under the circumstances. He or she can advise whether a trust, will, both or other options would most likely effectuate your interests. He or she can also ensure that all legal formalities are closely followed so that documents are legally valid.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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