When you start the estate planning process, it can be easy to get overwhelmed by all of the options available to you. Should you create a trust? Should you use a will? Who will your power of attorney be? Who should you leave different items to? Here are four things to consider when you are debating whether a will or a trust would be more appropriate for your situation.
Should You Choose a Will or a Trust?
- Trusts will avoid the probate process, but wills do not. Probate is filled with lawyers, fees and additional paperwork, and it can prevent your assets from being distributed in a timely fashion. Because all trust assets are owned in the name of the trust, they avoid probate and give the successor immediate access.
- If you have a child or grandchild with a disability, trusts are uniquely able to protect government benefits for any beneficiaries with a disability. If you rely on a will, they could potentially lose Social Security or Medicaid benefits. In a trust, the benefits will be accessible without potentially losing vital benefits.
- Trusts offer creditor protection for your inheritance, which means that any creditors targeting the assets of the beneficiaries of your trust will not be able to access the assets. Because they are in the name of the trust and not the child or grandchild, credit card companies, business losses or even bankruptcy cannot take money from the trust like they could a traditional inheritance through a will. This is a great way to safeguard your assets and ensure that they reach the intended destination.
- Unlike wills, trusts also allow assets to be accessed by minors without formal court intervention. According to the law, minors cannot legally receive assets. Instead, in a will, the court will use a conservator to safeguard the inheritance for your child or minor loved one and report to the court annually. Through using a trust, your minor children will be able to streamline the receiving process and eliminate most court involvement. Instead, the person that you name to manage assets for the minor will immediately be in charge and be able to use them for your stated purposes or pass them on at the age that you specify.
Estate Planning with Miles Tax Advisory
If you are unsure of whether or not you should choose a will or a trust for your estate planning , we are always here to assist you!