Wills, Trusts, and Why Both may Belong in Your Estate Plan
There are a handful of documents that can be included in an estate plan. While the right ones for you may differ depending on your needs, a will and a trust are two popular additions. A common misconception is that these documents are virtually the same when they actually serve very unique roles within an estate plan.
Direct how your property is dispersed upon your passing
Name an executor to carry out your wishes
Name a guardian for any minor children
These documents must be in writing and signed by you. During the signing, there must be a specific number of witnesses present, the number of which changes depending on your state.
If property is titled in the decedent’s name alone, with no beneficiary designated, then a probate case will be required to obtain a court order to transfer it. If the decedent had a valid will, the asset will be transferred per the will. If the decedent left no will, the asset would be transferred per the state’s intestacy law.
This court-supervised proceeding is used to authenticate the Will so that the named executor can proceed with the distribution of your assets and property. There are pros and cons to probate – the latter of which you may already be familiar with. It can be expensive, time-consuming, and stressful. But probate can sometimes be beneficial to families, especially for any serious questions or disagreements pertaining to your will. Note that wills become public records after probate is concluded, which may not be preferable.
Like wills, trusts are used to instruct the distribution of assets. But trusts allow for more control both over how and when those assets are distributed. For example, say you have a niece or nephew that wants to go to college. You could leave them some money with the requirement that it can only be used for higher education costs. If desired, you can even define how old they have to be to access the funds.
Another potential benefit of a trust is that you can include incapacity provisions. This can save loved one’s time as they try to gain access to the accounts needed to manage your finances in the event you become physically or mentally incapacitated.
Lastly, trusts can also help your loved ones avoid probate because the assets therein are already distributed to the trust. Because they avoid probate, these documents will remain out of public record.
Ready to get the ball rolling on your estate plan? As a member of General Electric Credit Union (GECU), you’re entitled to a no-cost consultation with an attorney thanks to our partnership with Wood + Lamping LLP.1 They’ll help you understand your estate planning options, such as the inclusion of documents like wills, trusts, and powers of attorney. Don’t hesitate to protect your assets. Go online to learn more about Legal Services through GECU.