October 26, 2020
If you're like most people, the idea of a will or trust is something you hear about on TV and in the movies, but what exactly these documents are and whether you even need one can be a bit of a mystery.
In a nutshell, a will and a trust are two similar, but different, documents that provide instructions for how your possessions and assets should be managed.
Both documents name someone of your choosing to be in charge of handling your affairs if you can't, and both documents can be used to give specific gifts or bequeaths to the people or organizations you choose.
Your will only comes into play after you've passed away. A will always triggers a court proceeding called probate. During the probate proceeding, the court will oversee the process of transferring ownership of your assets to your beneficiaries (the family, friends, or charities you want to inherit from you) according to the "rules" and instructions you provided in your will.
After your property and money have been transferred to your beneficiaries, the probate proceeding is concluded, and your will has essentially fulfilled its purpose and is no longer needed.
A trust acts very similarly to a will, but can be used during life. A trust also gives you more control over how and when your assets are transferred to your beneficiaries and doesn't require court involvement or probate. A trust can terminate at a certain date, or continue to exist for years after you pass away.
For example, you could create a trust that transfers half of your money to your daughter when she turns 25 and transfers the other half of your money to her when she turns 35. The terms of the trust are entirely up to you, and almost any way you can think of for gifting your assets to your family or friends can be accomplished through a trust.
What document is right for you will depend on your unique circumstances, including the value of your property, your family situation, and how much control you want to have over what happens to your property if you're no longer here. Your age and overall health should also be considered. If you have minor children, young adult children, or children with poor money management skills, a trust is almost always necessary to avoid a financial disaster. A trust also saves more money on the back end by avoiding costly court proceedings.
However, if you have a relatively low amount of assets and your beneficiaries and loved ones are all responsible adults, a will may be a more appropriate option.
In either situation, one document alone is never enough to create a truly comprehensive and effective estate plan. Reviewing your situation with an attorney is the best way to make sure you make the right choice for you.
The information on this page is for educational and informational purposes only and does not create an attorney-client relationship. This information should not be construed to be legal advice.
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