If you’re new to estate planning, it might be overwhelming to try to wrap your head around all the various estate planning tools at your disposal, and how they’re different and how they’re similar. In today’s blog post, we’re going to look at two of the most popular estate planning tools: wills and trusts.
Wills and trusts are both legal documents where you can state or express your specific wishes about the transfer of your assets at your death. Another similarity is that both a Will and a Revocable Trust can be changed, altered, amended or revoked by you at any time during your lifetime. That’s not the case if you choose an Irrevocable Trust.
The biggest difference between a Will and a Trust is that a Will only goes into effect after you pass away AND after your family goes through the public, government process called Probate.
TITLING OF ASSETS
A Trust on the other hand goes into action as soon as you create it and as soon as you put or title your assets into it – and that is the big difference. Because a Trust is also a legal entity (meaning that it is like a corporation or a person) then you can TITLE your home and bank and financial accounts in the name of your Trust. Choose a Revocable Trust, and you DO NOT give up any OWNERSHIP of any asset you TITLE in the name of your Trust.
Since a Trust is also a legal entity, then you can also designate your Trust the beneficiary (also a form of titling like ownership) of your retirement account or life insurance policy.
Because a Revocable Trust is the TYPE of legal estate planning document that allows you to TITLE assets in coordination with your wishes, while you are living, without you giving up ownership or control over your assets, then you have the peace of mind of knowing exactly what’s going to happen when something happens – without any extra steps like you or your family having to go through Probate. This is the main reason why
As you can see these are two significantly different tools. It is best to work with an experienced estate planning attorney who can help you decide why a Trust is a better planning tool. Contact Kevin Tharpe today!