An organized plan that clearly directs who is in charge and outlines who gets what assets, gives most a sense of relief about their estate plan. It’s very important to understand how a will operates, how a trust works and when it is appropriate to employ each of these planning tools. In a lot of instances, using both of these methods achieve goals of protecting assets and privacy.

The overall will process is quite complex, although frequent representation doesn’t make it seem as so. A will ultimately names who is to receive the property of the deceased. Without a will, property distribution may be left up to the courts. In most cases, this circumstance results in assets being awarded to the next of kin—not necessarily who you would want to inherit your estate.

If there is joint property ownership, the property passes to the surviving owner. Accounts and assets with a named beneficiary go directly to that beneficiary, and any assets held in a trust are subject to the directions addressed within the trust. These components present reason to double-check all accounts that you own and make sure they have two named beneficiaries—primary and contingent. This recommendation applies to retirement and investment accounts, as well as life insurance policies.

The probate court assigns an executor, chosen by the decedent and nominated in the will, to carry out the wishes as stated in the will. Other duties involve paying outstanding debts, taking care of taxes and overseeing the distribution of assets. Although the entire process of administering the will can be lengthy, especially depending upon the complexity of the estate, it is quite beneficial to have a full plan in place. During the probate process, the will becomes a public document.

The Trust Process

Alternatively, trusts are used to avoid issues that are sometimes created when assets are divided in a will. Trusts are legal structures that ultimately provide protection for assets. Assets placed in a trust do not belong to the individual, they belong to the trust. Due to this reality, trusts are not subject to probate. When a trust is created, a trustee is named to manage the affairs of the trust. Additionally, a successor trustee is named to manage the trust, if the trustee is unable to or will not serve.

Further, a revocable trust is used to take assets out of the estate. This type of trust allows the asset owner to maintain control. Options include the following: Assets can be moved in or out of the trust, or the trust can be dissolved, and the assets taken back. Although these benefits remain, there are no tax benefits because the trust owner is the trust maker, the trustee, and the beneficiary, as long as the owner is alive. On the basis of the owner’s passing, the designated successor trustee would then take over.

With an irrevocable trust, there are significant tax benefits; however, there is also a significant loss of control in relationship to the assets.

Will Vs. Trust

In relationship to further differences, trusts do cost more to establish when compared to wills. Additionally, they offer a number of advantages that wills fail to provide. The use of a trust ensures that little to none of your assets will go through probate; thus, speeding up the allocation process. Another benefit to trusts is that they also protect the family’s privacy, as trust details do not become part of the public record. There is also less involvement by the court in distributing assets, so fees may be lower.

Trusts may play an integral part in your estate plan, allowing wealth to be transferred to multiple generations. At the end of the day, it is always a good idea to speak with an estate planning attorney in attempt to learn about which planning tools are best for your particular situation. Various planning combinations and useful tactics ultimately work together to ensure the safety of your assets upon your death or incapacitation.

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