Secure And Protect Your Family’s Future.
Estate planning is a topic often avoided due to the sensitive nature of the subject matter — our mortality. However, by embracing this crucial financial planning exercise, you safeguard your family’s future and ensure that your assets are distributed according to your wishes. The two most common tools utilized in estate planning are wills and trusts. Let’s explore both to help you identify the optimal choice for your personal circumstances.
The Basic Difference Between Wills and Trusts:
Firstly, let’s understand the basic differences between wills and trusts. A will is a legal document that lays out your wishes regarding the distribution of your property and the care of any minor children after your death. A trust, on the other hand, is a legal entity that holds assets for the benefit of specific individuals (beneficiaries). The assets are managed by a trustee who is obligated to manage these assets as per the stipulated rules in the trust document.
The Critical Difference Between Wills and Trusts:
One of the critical differences between wills and trusts is when they take effect. Wills only become active upon your death, while trusts can take effect as soon as they’re created. Therefore, a trust can provide financial cover during your lifetime and beyond, ensuring that you or your beneficiaries can access the assets if you become incapacitated.
The handling of probate is another distinguishing factor. A will has to pass through probate, a legal process to authenticate the will and distribute the property. This process can be time-consuming, expensive, and becomes a matter of public record. On the contrary, assets held in a trust do not go through probate, allowing for a faster, private, and often less costly distribution.Some assets of a trust are complicated like estate taxable assets and your beneficiaries may need special handling because they have trouble managing money, have special needs, have addiction issues. or are in shaky marriages. These scenarios require deeper discovery and additional drafting to make sure these situations are addressed.
However, drafting a trust is typically more complex and costly upfront than drafting a will. Therefore, it might be an overkill for those with straightforward estate planning needs. Wills are simple, less expensive, and are more than adequate for many families.
Additionally, trusts do not negate the need for a will. Even with a fully funded trust, a will (often referred to as a ‘pour-over will’) is recommended to cover any assets accidentally left out of the trust.
So, which is best for you and your family — a will or a trust? It depends on several factors such as your financial situation, the complexity of your estate, privacy concerns, and your wishes for your family’s future.
If you have a modest estate and straightforward distribution wishes, a will is likely sufficient. Conversely, if you have a large estate, complex distribution plans, concerns about probate delays, or privacy concerns, a trust may be a more suitable option.
For families with minor children, a will is crucial as it’s the legal avenue to designate guardians for your children should anything happen to you.
Remember, there is no one-size-fits-all approach in estate planning. It’s often beneficial to have both a will and a trust as part of a comprehensive estate plan. Our wills and trusts attorneys can help you understand the options better and decide on a path that best meets your family’s needs. Call us at 352.379.1900 or complete the form below and we will set an appointment with our estate planning team.
Finally, keep in mind that estate planning is not a one-time activity. As your life circumstances change, so too should your estate plan. Regular reviews ensure your plan stays aligned with your current wishes, providing peace of mind for you and security for your loved ones.
Shannon Miller Talks Wills and Trusts;