The answer to this question depends on a number of factors. Your first step, though, is gaining a thorough understanding of the difference between a will and a trust. Unfortunately, there are a lot of misconceptions out there, which has left many people thinking that they can get by with nothing more than a simple will. While this may be true to a certain extent, those who rely on just a will may lose out on many of the benefits provided by the estate planning process.
The basics of a will
A will is a written document that primarily dictates how your assets will be distributed once you pass away. However, you can also use this document for other estate planning purposes, such as naming a guardian for your children and naming the individual who will manage your estate once you’re gone. You can even provide instructions about your final arrangements.
To render a will legally valid, it will have to comply with state law. This means that the signing of the document must be witnessed, and you have to have the requisite mental capacity when you create the document. Although those may seem like minor steps, they can actually become hotly contested issues in probate court once you pass away.
So, for a small estate, it may seem like a will is sufficient. But even small estates can be subject to issues that may warrant the use of one or more trusts. So, let’s look at the basics of a trust and how you may be able to use one to your benefit in your estate plan.
The basics of a trust
A trust is a legal vehicle where you essentially relinquish control over certain assets with instructions on how those assets are to be handled and distributed. A trustee is named to manage the trust and its assets, and that individual will be responsible for making distributions to your named beneficiaries.
But why would you need a trust? Well, certain trusts have advantages. Some allow you to pass on wealth to a beneficiary without creditors taking a bite out of the inheritance, while others allow you to ensure that trust assets are not quickly squandered away. With a trust, you can retain more control over the movement of your estate’s assets, too, as you can choose to leave assets to one individual for a certain period of time, then direct those assets to someone else at the end of that time period.
By using trusts, you can get creative in your estate planning and develop the customized approach that fits your situation perfectly. There are a whole host of trust options out there, so make sure you know what’s available to you before you settle on one or more of them.
Creating the comprehensive plan that you need
If you want to protect your assets and your loved ones as much as possible, you owe it to yourself to learn about your estate planning options. We know that can seem daunting, especially when you’re just trying to deal with the day-to-day complexities of your life, but you shouldn’t put off the process too long.
Also, you don’t have to figure out how to create the perfect estate plan on your own. Instead, you can reach out to a legal team for assistance that is adept in these matters. With counsel by your side, you’ll be better positioned to create the estate plan that is right for you and your family, which can put your mind at ease and protect the future that you envision.