When planning an estate, most people narrow their options down to a trust or a will. For some, a will with powers of attorney are sufficient. Others however prefer a trust. While a will and trust accomplish many of the same things, a trust offers some advantages over a will.
A trust – sometimes called a living trust – is a document in which a trustee is named to manage your assets during your lifetime for the benefit of a named beneficiary(s). Ordinarily, a person will name themselves as trustee and beneficiary along with a successor trustee and beneficiaries after the person’s death. A will on the other hand, names a personal representative to distribute assets to the named beneficiaries after death.
One critical advantage of a trust is that it allows probate to be avoided. For a will to be effective, it must “probated” after the person’s death. This will involve time and money to distribute the assets according to the will. A trust permits the probate process to be skipped and thus save money and avoid a public record of the estate plan and assets.
A trust can also provide more flexibility in the distribution of assets. This can include how and when the trust beneficiaries receive the assets. Additionally, for larger estates, a trust can minimize federal estate taxes.
Your ideal estate plan depends on your situation. An experienced attorney can help guide you through the process to help you determine whether a will or trust is best for you.