When estate planning, you have the option to make a trust. A trust is a useful method of preserving wealth for the next generation that people often overlook, but can be an essential tool in your estate plans.
Why would a trust help you? First, you should learn the difference between a trust and a will. Here’s what you should know:
What is a will?
A will is the most basic document in your estate plans. You’ll get to decide your last wishes in your will. You can name beneficiaries to inherit assets and an executor of the estate to handle any loose ends after you pass away.
What is a trust?
A trust actually removes assets from your estate and puts those assets in the hands of a trustee, who will distribute them according to the trust’s terms. While that sounds a lot like a will, there are a few differences.
For example, beneficiaries would have to wait for probate to end before they see any assets if you only create a will. A trust would be able to avoid this issue and give heirs assets as soon as you pass away. This can save time and issues, such as if someone wishes to contest your will and prolong the probate process. If someone wins a will contest case, your final wishes could be altered. Trusts are generally much harder to break.
Furthermore, your heirs could face estate taxes and not inherit the full amount of inheritance that you left behind. A trust could circumvent this issue because of the laws relating to trusts. They often have significant tax advantages for large estates.
Learning your legal options
It’s always good to be aware of your legal options when estate planning. You may need to reach out for legal help when drafting your estate plans.