Looking toward the future? Whether you’re thinking about your children’s education or your organization’s financial health, you’re probably wondering how you can make a difference even after you’re gone. That’s why so many turn to financial tools like wills and trusts.
But what’s the difference between a will and a trust?
In short, a living will is designed to create a plan for minor dependents and divide your trust assets amongst beneficiaries after your death. In contrast, a living trust can distribute your assets to beneficiaries at any time.
We’re here to answer that question through an in-depth look at each public document’s purpose and specific estate planning benefits so that you can decide which is best for planning your estate. Read on to find out all you need to know.
A living will is a legal document that takes effect after your death. This piece of paper is ultimately concerned with what will happen to your financial assets and material possession after you pass.
When drafting a will, you’ll designate an executor or personal representative to carry out your wishes. This person could be a trusted friend, spouse, adult child, or your personal legal counsel. Consult with your chosen executor to ensure they’re prepared to preside over your will.
Common aspects of a will include:
A will is a common and very necessary legal arrangement document for most people. It’s a useful tool to assure that your estate can be easily transferred and may help avoid complex legal situations and disputes over who is entitled to what.
To comply with all state and federal requirements, you will most likely require a legal or financial advisor to assist in the drafting of your will. Be sure to contact an expert to assure your will is legal and binding.
While a will is useful for nearly everyone, a trust document is a slightly more specified legal document.
Put simply, there are a lot of benefits to having trust. A trust document is a legal entity formed by a grantor to distribute its assets to beneficiaries. The trust is maintained by an appointed third party known as the trustee. This trustee is responsible for maintaining the irrevocable living trust.
The defining aspects of trusts include:
To decide between creating a will and establishing a legal arrangement trust, it’s helpful to analyze your own personal needs.
A will is useful in the following scenarios:
As previously mentioned, a will can benefit most people who are looking to pass on their trust assets after they’re gone.
On the other hand, an irrevocable living trust may work best for those with the following needs:
Importantly, the proceeds of both wills and revocable trusts may be subject to estate tax, capital gains tax, and other requisite taxes. Consider consulting with a financial expert to get the full picture of your IRS requirements.
To avoid having to set up a trust in person, simply fill out this form to apply for trust online right now.