Some individuals could get away with having either a trust or a will.
Estate planning involves making decisions.
You will need to choose who makes decisions if you become incapacitated.
It also will be important to select heirs and perhaps protect their inheritance “for” or “from” them as needed.
According to a recent MSN recent article titled “Family Trusts vs. Wills: What Are the Differences Between These Estate-Planning Options?,” choosing how assets will be distributed is deeply connected to your personal goals and circumstances.
Ultimately, you will need to decide whether you use a will-based plan or a trust-based plan.
Even with a trust-based plan, you will likely need a last will and testament to direct any assets outside of the trust through the local probate court.
Without direction, any assets subject to probate will be distributed according to the laws of your state of residence.
This will be costly in time and money and leave you with no say regarding who gets what.
With a last will and testament, you will designate who receives distributions from your estate, who serves as the guardian for minor children, and who holds the role of executor to settle your estate through the probate court.
With a revocable living trust (RLT), you are creatimg a legal entity to hold and manage your assets outside of probate.
As the trustmaker (also known as the grantor, settlor, or trustor), you will design the RLT to your specifications and then “fund” the RLT with your assets.
Your RLT also allows you to designate co-trustees or successor trustees to manage the trust assets if you become incapacitated or die.
Unlike a last will and testament, a RLT is a private document.
The RLT does not have to be filed with the probate court, but a last will and testament does.
This privacy can be particularly appealing to those with a larger estate or a significant number of assets.
A RLT also provides more protection and control in a variety of situations.
Following your death, if the inheritance continues to be held under the terms of your RLT, then the inheritance trusts for beneficiaries become irrevocable.
What does that mean?
These inheritance trusts can protect their assets from potential divorces, lawsuits, and bankruptcies.
If the inheritance trusts are designed to function as supplemental needs trusts, then they can provide for beneficiaries with disabilities without disqualifying them from government benefits.
As previously mentioned, you may require a last will and testament to handle the distribution of certain property subject to probate.
A “pour over will” is commonly utilized to make the your RLT the beneficiary of any assets subject to probate.
Whether you choose to plan your estate through a last will and testament or a RLT, you will need to work with an experienced estate planning attorney to ensure it is done properly.
Reference: MSN (Aug. 27, 2021) “Family Trusts vs. Wills: What Are the Differences Between These Estate-Planning Options?”