No one likes to think about the end of their life, but it’s important to do so in order to plan for the security of your family and property. It’s a daunting task and not only because it feels unpleasant. It’s hard to know what to do in order to make sure your family and property are taken care of.
You’ve heard of wills and trusts in estate planning, but what are they exactly and which do you need?
What Wills and Trusts Both Do...
- Name beneficiaries for your property – A will simply describes the property and names the person who will receive it upon your death. A trust does the same, but the property is also transferred to the trust.
- Leave property to young children – Since those under 18 cannot legally own property except for small items, a will must name an adult to manage the property. With a trust, there is already someone named to take care of the property until the child reaches 18 or some other age you determine.
- Are revisable - You can revise both documents as long as the trust is revocable.
- Name guardians for your children – You can make sure your young children are provided for.
- Name property managers for child’s property
- Name someone to take over after you pass, an executor in a will and a trustee in a trust – This role is very important. After you die, there are many tasks to manage such as paying your bills and distributing any property that goes through probate. An executor also communicates with the court.
- Instruct how debts and taxes are paid – You can make sure that your debts are paid from the funds you name. You can also use a will to forgive any debts owed to you.
What Only Trusts Do
- Avoid probate – Not everyone needs to avoid probate. This long and tedious process officially wraps up your affairs once you’re gone, but if you don’t own much, it may not make sense to have a living trust. In fact, if you have lots of debt, a trust may not be necessary. But if you do have a lot of property to distribute, a living trust will save your family and beneficiaries any fees and interference from the court.
- Keep your privacy after your death – A living trust does not become a public document unlike a will.
- Does not require two witnesses, only one Notary.
- Property goes into the trust – This means you will have to retitle any real estate you own. Property that does not require title can simply be listed and attached to the trust document.
- More protection from legal challenges – Either can be contested, but a trust provides a layer of privacy.
- Avoid conservatorship – If you become incapacitated, a trust allows you to name someone to manage it for you. A will does not. If you have a will only, you can create another document called a durable power of attorney to name someone to manage your affairs when you no longer can.
We encourage you to contact us with any questions. We’re here to help you make sure your family and property are secure.