Tim Alles

Jordan Bush

Chris Shourds

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Previous Newsletters

April 2021 Does My Estate Plan Have An Elephant In The Room? (Part I)


March 2021 How Can I "Trust" My Trustees?


February 2021 What Do Tiger Woods' Tweets, and Your Social Media Content Have to Do with Estate Planning? (Part II)


January 2021 What Do Tiger Woods' Tweets, and Your Social Media Content Have to Do with Estate Planning? (Part I)


December 2020 What Are Estate Taxes And Why Do They Matter?


November 2020 What Life Events Should Trigger an Estate Plan Review?


October 2020 My Child Is A Spendthrift. What Can I Do To Protect Their Inheritance?


September 2020 What Is the Difference Between Estate Planning and Elder Law?


August 2020 Estate Planning After a Divorce - What Does It Mean for Your Estate Plan?


July 2020 What Should You Expect From Your Trustee?


June 2020 Should You Pass Your Assets Through A Trust Or A Will?


May 2020 Important Issues To Consider For Your Estate Plan


April 2020 Important Estate Planning Considerations During a Pandemic Crisis


Should You Pass Your Assets Through A Trust Or A Will?

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Estate planning options and jargon can be confusing. So how do you know the best way to transfer your property to your loved ones after you pass away?  Many people will argue that a will is the best method; while others recommend a trust. In many cases, both are used.  There are benefits and drawbacks of each. Your decision will consider personal concerns and priorities, as well as the nature of your estate and beneficiaries.  Let’s look briefly at how and wills and trusts work.

What Are Wills?

A will is the first estate planning document that most people consider. While there are many clear benefits of having a trust to pass on your property, a will can still be an essential document to have as part of your estate plan. It is particularly effective for small estate plans.

 

It designates someone to serve as the personal representative of your estate, known as the executor. If you are using your will to distribute your property after death, then your personal representative will name your beneficiaries and the property each one shall inherit. It also is used to name guardian(s) for minor children; which cannot be designated through a trust.

 

Additionally, some people fail to properly transfer all their property into their trust. This means there might still be property leftover that needs to be addressed. You can use a pour-over will to instruct that any omitted property be transferred to your trust upon your death. 

What Are Trusts?

The most common type of trust is a revocable living trust. This means that you create the trust while you are living; and you can amend the trust or completely revoke it at any time. You are the trustee who can manage and access the trust property while you are capable. Should you become incapacitated or pass away, your designated successor trustee will take over. The trustee will then manage and distribute your trust estate according to your instructions.

 

There are also irrevocable trusts, meaning that they cannot be modified, except under strict and specific circumstances. All ownership of assets is transferred into the trust, and it legally removes all the rights of the grantor. This type of trust can severely limit options. However, it can be an effective solution for wealthy individuals seeking certain tax advantages and asset protections.

How Do I Weigh My Options?

Most people should have a will as part of their estate plan. However, your property does not have to transfer to your beneficiaries through your will. Instead, if you create a trust, your property will be passed through the trust instead. So, which one is right for your situation? The following are some benefits of each and factors to consider.

Preventing Probate

Probate is the legal process of distributing and wrapping up your estate. Having a will makes the probate process simpler than not having a will; but having a trust can make this process even easier for your beneficiaries.

 

Property held in your trust does not have to go through probate, which can significantly reduce the time and resources needed for this process. Instead, the property will be distributed directly to your beneficiaries from the trust by your successor trustee. This is the most common reason that people form trusts to pass on their estate.

Confidentiality

When a will is submitted to probate, it becomes public record, and anyone can obtain information about your estate property and assets, as well as what each beneficiary receives. A trust can be created by will, but that means the provisions of the trust also become part of the public record. On the other hand, only your beneficiaries and trustee have access to the contents of your trust, if created during life, and this confidentiality is an attractive benefit for many people.

Planning for Incapacitation

Your will is effective after you pass away. It does not protect you or your estate should you become mentally incapacitated. You will need additional estate planning documents, such as powers of attorney for healthcare and property, to plan for the possibility that you can no longer manage your healthcare and financial affairs. If you do not have such documents in place, the court might need to appoint a guardian.

 

If you have a funded revocable trust, the successor trustee can step in and take over if you become incapacitated; though your property will not be distributed until after you pass away. A trust can ensure that your estate is properly managed even if you can no longer do so yourself.

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