You worked hard for your money, so it is natural to want complete control over what happens to it after you pass away. When you start estate planning, deciding whether to utilize a will or trust (or both) can be a crucial step in the process of passing down your assets. No matter how much your assets are worth, you need a strategy in place for your circumstances, ensuring your money is passed down fully and on your terms.
As you start estate planning, establish whether a trust or a will is more suitable for your assets and needs.
Passing Down Money Through a Will
A will is essentially a document that designates how to handle your assets after your passing. You will choose an executor to enact your wishes written in the will. This can be anything from guardianship over children or pets or the distribution of assets and wealth. A will is a great way to ensure that the proper assets get handed down to the correct people.
Wills are an essential first step in any estate planning process as they can ensure your wishes are written down and that your assets are in order. However, assets within the document will go through the probate process, which can be timely and expensive for your family. As said, a will goes into effect after your passing, meaning your assets are not protected under a will if you are incapacitated. Wills also take the backseat to trusts regarding handing down assets. Placing assets, like money, into a will can ensure it goes through the right people, but it will have to go through the probate process and is not protected from possible taxes.
Passing Down Money Through a Trust
A trust is an entirely separate legal document where you, the grantor, choose a trustee to distribute the assets according to what is written in the trust. You can choose from various trusts depending on your intentions, but the two main ones you might see are revocable and irrevocable trusts. A revocable trust, also known as a living trust, allows you to change the beneficiaries and assets while you are alive and capable of doing so. On the other hand, an irrevocable trust is permanent and unchangeable once they are signed and funded.
A trust might cost more to set up than a will, but with the stability it brings to your assets, it might be an essential step to take. Trusts will also take precedence over wills and are effective right at the signing date. Irrevocable trusts provide tax benefits and protect your estate from creditors, ensuring that when assets are passed down, such as money, it is the total amount you wish to pass down. Additionally, trusts do not need to go through probate and are less likely to be challenged. If you are choosing to pass down money, a trust ensures it is done without a hitch and possibly without taxes chipping away at it.
What Should You Do?
The estate planning process starts with you taking inventory of your assets and strategizing your plan to pass them down to your family and friends. If you have specific assets you want to go to the correct person without outside meddling, a trust can be your answer. However, if you have simple wishes that can be done through probate and a trusted executor, a will might be all you need.
To decide what is suitable for your assets, reach out to the professionals. Estate planning attorneys can provide you with the guidance you need to pass down your assets accordingly and do it with the least amount of interference. Their expertise can help you develop the perfect strategy to decide whether to use a will or a trust (or both). If you are starting your estate planning process, contact the team at Hartmann Law today.