Estate planning can seem very complicated, especially if you have never gone through estate planning before. Educating yourself about how to prepare for tomorrow is a significant step in securing your future. One of the most common issues that people are not familiar with is the difference between wills and trusts.
Many people do not know how estate planning can benefit them, which is why 60% of Americans do not have an estate plan. Wills and trusts help many people in different ways, and many assume that they both provide assets or income to others, but how are they different?
What wills do
A will is a document that a testator creates to declare how they want to disperse their property and assets upon their death. This document appoints a representative to uphold the testator’s last wishes, and it also assigns beneficiaries who will receive assets based on the testator’s specifications. A testator can also update their will for any number of reasons, including additions to their family, significant career changes, or relationship changes. The assets in a will commence once the testator passes on.
What trusts do
The person who creates a trust is called a “grantor.” A grantor can also be a testator if they made both a will and trust. Trusts come in several forms that have specifications on when the assets disperse, and if the grantor can amend the trust. Trusts also can reduce or avoid taxes during the dispersal of assets. One of the most significant benefits of a trust is that it avoids the probate process. Probate can take weeks or months to settle, and cost considerable amounts of money along the way. A trust avoids the complications of probate and fulfills the wishes of the grantor swiftly and efficiently.
Which do you need?
An estate planning attorney can help review what options are best for you and help you put your wishes into a legally binding document. Will and trusts provide their benefits to those who create them, knowing which is right for you can help you secure your future.