Less than half of all American adults have an estate plan, according to a survey by caring.com. Whether you’re a parent, a young entrepreneur or a business leader with decades of experience, planning your estate is crucial.
A basic will is often the starting point, but a trust might also be necessary for some. By creating a will or trust, you can protect yourself and your family and ensure that others carry out your wishes after you pass away.
Defining wills and trusts
Understanding the fundamental differences between wills and trusts can help you decide how to structure your estate plan. Here’s a breakdown:
- Will:
- Manages what happens to your assets after death
- Needs to go through probate, which can take time
- Becomes part of the public record, including your will, property details and beneficiaries
- Trust:
- Goes into effect as soon as you sign the paperwork
- Can dictate what happens to your assets while you’re alive
- Avoids probate, allowing quicker distribution of assets
- Maintains privacy, as trust details are not part of the public record
Both tools serve to distribute your assets, but they operate in different ways and at different times.
Do I need a trust if I have a will?
When it comes to estate planning, it’s not a matter of choosing between a will and a trust. For many, a will is enough to share their wishes with their beneficiaries. However, there are specific situations where having a trust can also be beneficial:
- Protecting your privacy: A trust keeps your estate’s details out of the public record, protecting your beneficiaries’ privacy.
- Controlling your assets while alive: A revocable trust allows you to manage your assets and provide instructions for their use if you become incapacitated.
- Managing property in multiple locations: A trust can simplify the process of managing real estate in different states, avoiding multiple probate proceedings.
- Managing the distribution of unusual assets: Trusts can handle complex assets like mineral rights or timeshares, avoiding complicated and costly probate.
Experienced estate planning attorneys can tailor your plan to your unique needs, allowing you to manage your assets as you see fit.
Keeping the peace between beneficiaries
A valid will and trust can ensure your wishes are carried out as intended. These documents provide clear instructions on how to distribute your assets, which can help avoid disputes among heirs.
By outlining your intentions clearly, you minimize the risk of misunderstandings and conflicts, fostering harmony among your beneficiaries during a challenging time.
Whether you choose a will, a trust, or both, carefully planning your estate can provide peace of mind for you and your family.