Will versus a Trust
I think everyone is familiar with the phrase, “You can’t take it with you when you go,” you can and you should do your very best to control your assets from beyond the grave. One way you accomplish this is by establishing an estate planning, i.e. a Trust and Will, the two main parts in an Estate Planning.
Will – what is a will?
A will is a legally enforceable document stating how you would like your affairs handled and assets distributed after you die. It is an important component of estate planning.
If you have minor children, it is important to have a will that appoints guardian(s) for your children. If a guardian is not appointed at the time of your death, your surviving family will have to seek help in a probate court to have a guardian appointed for your children. The person appointed may not be the one whom you would have wanted to be entrusted with your children.
In a will you may also state your wishes as to how you will pass a portion of your estate to a minor child. A will also allows you to disinherit a child if that is your wishes, however you should be aware of the laws that govern your state, as each state’s laws are different.
A will can be effective in an estate transfer or other legal proceedings, however there are drawbacks such as the fact that your estate will become part of public record, your estate must go through probate court and it can be expensive and cost your estate and the beneficiaries of your estate thousands of dollars.
TRUST – What is a trust?
A trust is a method of estate transfer in which you give another person authority to handle your assets and distribution for the benefit of your beneficiaries.
A Revocable Living Trust avoids probate court. It is called a living trust, because it is created while the property owner or trustor, is alive. It is revocable, as it may be changed during the life of the trustor. The trustor maintains ownership of the property held by the trust while the trustor is alive. The trust becomes operational after the trustor has passed. Unlike a will, the living trust passes property outside of probate court, hence there would be no need for attorney fees and your property can be passed immediately and directly to your named beneficiaries.
POUR-OVER WILL – What is a Pour-over-will?
A Pour-Over Will is a last will and testament that serves as a safety device to capture any assets that are not transferred to or included in a living trust, called Funding Your Trust. Simply put, anything with title is re-titled into the name of your living trust. Of course some items with title are not recommended to be changed into the name of your living trust, such as a vehicle, where the title can be easily changed through the DMV.
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