Wills and trusts are the cornerstones of estate planning, giving you the power to leave your belongings to those you see fit. However, while these documents perform similar functions, there are critical distinctions between the two. Understanding how they work before you start estate planning will help ensure you make the right choice for your family.
A will is a legal document that gives your final wishes the force of a court order. In your will, you may leave specific pieces of property to certain individuals, name an executor to manage your estate, and even nominate a guardian to care for your children.
If you prepare a will, your estate will have to go through probate—the legal process of settling debts, retitling assets, and distributing them to your beneficiaries. Probate typically takes several months to complete, but it may take years if family members challenge the will.
Preparing a will is relatively simple, making it the best choice for most people. These documents are also easy to update, so you can change your estate plan if you get married, file for divorce, or have a child.
Unlike wills, trusts are separate legal entities that take ownership of your assets. Instead of the owner, you become the beneficiary of the trust, which is managed by a trustee. Trusts may offer some tax benefits, and they can also simplify the process of distributing your assets after death.
Upon your death, any assets you owned in your name become the property of the trust. Depending on the instructions contained in the documents, the entity may then be dissolved, and its assets distributed to those you choose, or the trust can simply pass to another beneficiary.
Avoiding probate is one of the primary benefits of establishing a trust, especially for those who own property in multiple states. These documents also give you more control over the conditions under which your beneficiaries receive their inheritances. Finally, trust documents are not matters of public record, making them popular with families who want to preserve their privacy.
For over 30 years, the Upstate Legal Center of John V. Shepard has helped families throughout Rochester and Monroe counties of New York protect their wealth and their loved ones. They understand how challenging estate planning can be, and are committed to providing everyone with the competent, compassionate legal service they deserve. Visit their website for more on their estate planning services, or call (585) 429-5422 to make an appointment today.