If you are going through the estate planning process, you may find it confusing. There are several options available to you, so this is natural. Many people wonder whether they should have a will, or trust, or both.
The majority of people find having both a revocable living trust and a will beneficial. Both of these work in synergy to help ensure that the law and your loved ones carry out your wishes upon (and even before) your death.
What is a will?
A will does not come into effect until after your death. In the event that your assets are still in your personal name at the time of your death, your will determines what happens to those assets. (It is possible for your assets to not be in your own name at the time of your death: we will discuss this more later.)
Any of your assets involved with a will go through the probate process. This is in direct contrast to a trust: any assets in a trust avoid probate. There are pluses and minuses to probate: the well-known minuses include the length of time probate takes, as well as the cost. How expensive and lengthy probate is often depends on the state.
Additionally, there is nothing private about probate. You will file your will with the court and all proceedings are public. However, in some situations public scrutiny is a positive, as transparency can inspire fairness.
A major advantage to a will is that moving assets in and out of the estate is easier when you own them in your personal name.
What is a living trust?
To compare, if you opt for a living trust, you will place your assets in the name of the trust. This removes them from your direct ownership. The word revocable means that you are in charge of trust administration as long as you are alive and can make changes.
With a trust, you name yourself as one of the trustees, which gives you control over the assets. You will also identify a “successor trustee,” who will take over the trust at the time of your death. This individual will, upon your death or incapacitation, distribute the assets in the trust, following your wishes.
The two major benefits to a living trust is that you will avoid probate and the process is not open to public scrutiny. Your surviving descendants are less likely to challenge a trust than a will. This is because the mechanisms of a trust are private and not public. However, in order for the trust to have any purpose at all, you must transfer your assets into the trust. If they are in your own name, the government subjects the assets to probate. Additionally, living trust cost may be high compared to the cost of drafting a will, depending on your particular situation and needs.
Which is right for me?
Again, the majority of estates involve both wills and trusts. To what degree depends on your needs and assets. It also depends on your family dynamics, the nature of your assets, and what state you reside in. What is right for your neighbor may not be right for you. The best way to ensure that you have an estate plan tailored to your needs is to work with an experienced estate planning attorney. Contact AmeriEstate today to learn more about our estate planning services.