When delving into your estate planning needs, you may feel overwhelmed by all your options. While your estate plan may have many moving parts, it will most likely include a trust and/or a will. With the help of an estate planning attorney, you can effectively navigate your options and make the right choice.
Many assume one is more valuable than the other; however, the truth is including both a will and a trust in your estate plan may be in your and your family’s best interest. Still, trusts and wills have different functions, and you should know the benefits of each to understand how they can satisfy your needs.
What is a Living Trust?
A trust is a type of account you set up that assigns a trustee and holds specific assets and property. The assets and income from those assets in the trust transfer to the beneficiaries per the language of the trust document, for example, when you pass away.
Typically, trusts become effective immediately after you open the account. A “revocable living trust” allows you to transfer assets before you pass away, enabling you to change your trust beneficiaries, add or remove debts and assets, and make other modifications.
What is a Will?
A will describes a variety of legal matters relevant when you pass away. When you die, your will describes things such as the individuals or entities you wish to receive your assets and property, nominates the individual(s) you wish to administer your estate, and, if you have minor children, nominates the individual(s) you wish to serve as guardian over your minor children.
You can also include language about any specific individuals you wish to disinherit, with the exception of your spouse in North Carolina, as well as your decisions regarding your funeral and burial or cremation.
Unfortunately, wills must go through probate before any assets or property can be passed down to beneficiaries. Additionally, the information contained within a will is considered a matter of public record, which many families often consider invasive.
Pros & Cons of a Trust
Many advantages come with setting up a trust. Trusts allow your family to inherit your assets and debts without going through probate.
Additionally, the assets and property contained within a trust remain private, unlike a will. Furthermore, trusts allow for the distribution of assets and property before an individual’s death and, in some cases, the opportunity to make changes before your passing.
Types of Trusts
You could also choose from many types of trusts, depending on the circumstances of your case. Your options might include the following:
- Revocable trust – These trusts can be amended, changed, modified, or terminated at any time.
- Irrevocable trusts – Irrevocable trusts cannot be altered or changed once set up.
- Charitable trusts – Charitable trusts are similar to revocable trusts and allow the charities to benefit while the grantor is still living.
- Special purpose trusts – Special-purpose trusts are set up to handle special circumstances within your family.
- Special needs trusts – These are typically set up to help support individuals with lifelong disabilities that require economic support without limiting their opportunities or eligibility for government assistance programs, such as Social Security disability benefits, Supplemental Security Income (SSI), and others.
Pros & Cons of a Will
In every circumstance, having a will is in your best interest. Although it may feel uncomfortable to determine what happens to your estate after your death, planning protects your family. If you die intestate (without a will), the probate court disperses your assets, property, and debts according to state law.
However, with a will, you could assign a trustworthy administrator to ensure your assets and property are distributed as you wish. You also avoid potential issues if you have minor children and were to pass away without assigning a legal guardian.
Benefits of Having Both a Trust & a Will
Many wonder whether they should go with a will or set up a trust when handling their estate plans. However, many people decide to write a will and set up a trust to avoid issues with probate and intestacy laws. They also want to ensure their wishes are executed as they desire when they pass away.
If you hope to protect your privacy, ensure a swift transfer of assets, and avoid any financial costs that could arise without a trust or will, having both helps protect you and your family across all avenues.
Meet With an Estate Planning Attorney Today
Most people opt to include both trusts and wills when crafting their estate plans. If you are ready to learn more about how to set up a trust or the information that should be included in your will, do not hesitate to contact our dedicated Charlotte Estate Planning lawyer Ryan Stump today.View All Blogs