Planning Your Estate?

Including a trust in your estate planning can provide many benefits, such as ensuring your assets are distributed according to your wishes, avoiding probate, and minimizing estate taxes. Additionally, a trust can offer privacy and protection for your beneficiaries, as well as flexibility in managing and distributing assets.

Planning Your Estate?

Consider a Trust

A trust can be an important part of a comprehensive estate plan, as it can help you achieve a variety of goals, including:

Asset protection: A trust can protect your assets from creditors, lawsuits, and other legal claims, by placing them in the hands of a trustee who manages them for the benefit of the beneficiaries.
Estate planning: A trust can help you plan for the distribution of your assets after you pass away, and can also minimize estate taxes by reducing the size of your taxable estate.
Privacy: A trust can provide privacy for your assets, as they are not typically part of a public probate record, which can be a matter of public record.
Control: A trust allows you to maintain control over your assets, even after you pass away, by specifying how they should be managed and distributed.
Flexibility: Trusts can be designed to achieve a variety of goals, such as providing for a loved one with special needs, supporting a charitable organization, or even providing for your pets.
Avoid Probate: A trust can also help to avoid probate which is a time consuming and costly process.

Difference between a trust and a will

A trust and a will are both legal documents that can be used for estate planning, but they serve different purposes and have distinctive characteristics.

The Internal Revenue Service defines a trust as “a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another”. A trust can be created during a person's lifetime (an inter vivos or living trust) or upon death (a testamentary trust). Trusts can be used for a variety of purposes, such as asset protection, estate planning, and tax planning.

A will, on the other hand, is a legal document that specifies how a person's assets will be distributed upon their death. A will goes into effect only upon the death of the person who made it, and it must go through the probate process before assets are distributed to the beneficiaries.

One key difference between a trust and a will is that a trust can be used to avoid probate, which can be a time-consuming and costly process. Because a trust is a separate legal entity, assets held in trust do not need to go through probate before they can be distributed to beneficiaries. A will, on the other hand, must go through probate before assets can be distributed to beneficiaries.

Another key difference is that trusts can provide for asset management and protection both during the grantor's lifetime and after their passing, while a will only comes into play after death.

Why you should avoid the probate process

Probate can be a time-consuming and costly process that can be avoided through proper estate planning. During probate, the assets of a deceased person are gathered, debts are paid, and the remaining assets are distributed to beneficiaries according to the terms of a will or state law. By avoiding probate, you can save time and money, as well as protect your privacy, as probate proceedings are typically public. It’s important to note that the probate process can be very time-consuming and can also incur significant legal and administrative costs which eat into the inheritance of the beneficiaries, which is why steps should be taken to avoid this process.

As with all financial decisions, it is advisable to consult a qualified attorney or financial adviser to determine the best approach for your specific situation.