Creating an estate plan that works for you means choosing the right tools for the job. By determining the goals you would like your estate plan to achieve, you can much easier wade through the often confusing world of estate planning. While wills and trusts are both great ways to dispose of assets, they are different instruments with different purposes. In fact, you may use both in the same estate plan, depending on your needs.
Benefits of a will
A will is a legal document in which you typically will appoint an executor and appoint a guardian for your minor children. If you die intestate (i.e., without a will) and have made no other estate planning provisions, the state will distribute your assets as according to state law – often in a set order of succession, and not in the order you may think. If the state is completely unable to find a significant relative to transfer your assets to, it will be held by the state indefinitely. As such, it’s important that you account for the disbursement of your assets with the help of a will – and this is often the first step for most who are first entering into estate planning.
Benefits of a trust
A trust is a legal agreement between a person (the “trustor”) and another person (the “trustee”). The trustor transfers ownership to the trustee to manage and disburse assets from the trust as specified in the agreement. Whereas a will can be used to specify who should receive certain assets, trusts are much more flexible tools. They may be used to disburse assets, similar to a will, but have much more flexibility in how those assets should be distributed and when. For instance, a trust may specify that assets are to be distributed over a specific period of time, such as from the time the beneficiary is 18 years old to the time they’re 25 years old. The specificity of trusts allows the trustor to use them for certain specific purposes, such as providing a disabled loved one with consistent income over a period of time without affecting their eligibility for support programs.
Overall, wills and trusts are both great tools for you to use in your own estate planning. While most plans will make use of a will, not all will make use of a trust – although plenty of different estate plans could benefit from the inclusion of a trust. To find out what’s right for you and your estate plan, contact Alright and Lumpkin today.
Albright & Lumpkin, PC
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