Are you looking to prepare an estate plan? You might envisage implementing a Last Will and Testament for serving as a basis for your plan. A Will might be served as a foundation for the comprehensive estate plan, but, it isn’t the single option you are left with. A trust, on the other side, functions as the cornerstone of your estate plan.
With regards to Wills and trusts, how can you recognize which among the both is appropriate for your estate plan? The best method to make assure that you will take the correct decision is to consult an Estate Planning Attorney. In the meanwhile, the attorney will tell you each and everything that’s important for making a decision.
The Basis for Last Will and Testament
What does Last Will and Testament mean? It’s a legal document which communicates the final wishes and desires of a person relating to the dependents and possessions. You will be accessible for both the general and special gift if you have set up a will at your place. For instance, you can gift your vehicle to an heir.
Also, you can gift a specific percentage of your estate to an heir. For instance, you can gift 25% of your estate to an heir. A Will provides you with an opportunity that you designate somebody as a Guardian for your kid in case that person becomes a necessity.
A trust is a relationship where a property is being held by a party for the advantage of the other person. A Settlor prepares it, i.e. the person who transfers the property to a Trustee. The person, who is named as Trustee, holds that property for the heir of the trust.
Mainly, the trusts are allocated into two different categories, one is testamentary, and the other one is living trusts. A testamentary trust doesn’t get activated till the Settlors’ become deceased. It gets activated by a provision in the Will of a Settlor. A living trust gets activated as early as possible when all the formalities are completed.
Some Considerations for Wills vs. Trusts
Both a Trust and Will can be utilized for allocating your estate assets when you become deceased. When determining which one to utilize as your major appliance of estate planning, you must take into account the following factors:
Aims and Objectives of Estate Planning
At times, a specific aim and objective of an estate planning signify whether a trust or a will is a good choice or not.
You can revoke or modify a will at any point of time as a testamentary trust or a revocable living trust. But, an irrevocable trust can’t be revoked or modified when it gets activated.
Avoidance of Probate
Probate is a legal proceeding which gets followed when a person passes away. This is expensive as well as time-consuming. A Will need to pass through the process of probate because most of the assets gets distributed by means of the provision in a Will. On the other hand, trust assets bypass the process of probate.
A minor child can’t receive from your estate directly. But, in case you are a parent of a minor child, or you plan to have kids in the future, then, in such a situation, a trust will be the best option. That’s because you can protect the inheritance of your kid till the time he or she reaches the maturity age.
Complexity and Size of an Estate
In case the assets of an estate are quite simple and the estate overall value modest the administering cost of a trust might not be guaranteed. In such a situation, a Will is a sensible option.
The gifts mentioned in your Will becomes the absolute property of the when the transfer of ownership gets completed. In case you have a spendthrift heir, the one whom you are gifting a great amount isn’t an ideal option. At that point, a trust will be a better option. A Trustee will take care of your assets held in the trust. The Settlor prepares the trust terms, enabling you to preserve a specific degree of control over the gifts you make utilizing a trust.
It cannot be said the one is perfect and the other one is not. Both of them are the important estate planning documents as they offer unique benefits.
John Barret is a blogger with the Elder Law Center of Wisconsin from the past four years. He is a law graduate in the US and enjoys writing about different legal processes, aspects of the laws, and the significance of having an attorney.