If you’re getting ready to plan your estate, understanding the difference between wills and trusts will help. Both are estate planning tools in Park Hills, MO, and whether you use one or both will be part of your overall estate strategy. Both help you transfer property to your heirs, and depending on what you use, your assets may even skip going through probate. As long as you work with a reputable estate planning attorney, you can use these tools to help your loved ones navigate a difficult and confusing time after you die.
A will is the most commonly understood estate planning document. People use them to leave specific directions as to how their property should be distributed after they die. They can also be used to provide care for minor children.
All wills must go through probate, and the document is only active upon your death. Wills can be contested, which adds to the length of time the probate process requires. Some people prefer to put their assets in trusts instead, which skip probate and cannot be contested.
If you die without a will (known as dying “intestate”), your assets will be distributed according to state law. This usually means that your assets will be left to any spouse or children first, then your parents, then your siblings. If you have none of the above, the state will continue to go down the line of succession until they find your next of kin. Should you not have any legal next of kin, your estate will default to the state.
Unlike wills, trusts can be created and executed during your lifetime. For example, you might put your home in a trust so that, upon your death (a living trust), it goes to your child and skips the probate process. However, you can still live in it (or sell it) during your lifetime.
Trusts do not require probate, nor will the beneficiaries usually need to pay an estate tax on their inheritance. You will need to give someone the authority to look after your assets on behalf of the beneficiaries. These are called trustees, and they will oversee the trust management and property distribution.
There are two broad types of trusts: living trusts and testamentary trusts. Both types of trusts go into effect immediately. Living trusts allow you to control your property when you’re alive, then go to your beneficiaries after your death.
Another benefit to trusts is that they remain private, whereas wills are a matter of public record. If you don’t want the public to know how much you left to your heirs, consider using a trust for asset transfer.
You can use both wills and trusts at the same time—and if you have significant assets, you may wish to do so. The most important thing to remember is to use a skilled and qualified attorney to help you devise the appropriate estate planning strategies in Park Hills, MO.
For help with your estate planning, call Maynard & Joyce, LLC today.