Regardless of your age, if you have dependents, you should look into creating a will, a trust or both. Putting those measures in place can help ensure your loved ones are not burdened with sorting out your financial affairs in the event of your death. Additionally, it can help offer stability for those you leave behind.
But how does a trust or a will work? Do you need one or both to get your affairs in order? First, let’s talk about what each of these legal transfer methods entails.
What’s the Difference Between a Will and a Trust?
In case you’re not already familiar with the differences between a will and a trust, we’ll highlight that below.
What is a Will?
Probably the biggest takeaway of a will is that it goes into effect only after you die. With a Morris Hall estate planning representative, you will designate someone as the executor, who will be the person in charge of carrying out the instructions in your will. Be sure your will gives the executor access to your financial accounts and records so they can seamlessly take control of your assets.
If you are the parent/guardian of minor children at the time of your death, your last will and testament will ensure a new guardian is assigned to care for them. Making this decision before anything happens to you can help ease the stress of uncertainty for your loved ones, as there will be no question regarding who will take on that role. Additionally, your will can list beneficiaries, or recipients, of any heirlooms or sentimental belongings you possess.
A will is also an effective way to detail your funeral arrangements so loved ones do not have to make those decisions during their time of mourning. Since your financial status may change throughout your life, or simply your tastes and desires, it is recommended you periodically revisit your will to ensure it is up to date with your wishes.
What is a Trust?
It might sound like a will covers all your assets, and a trust isn’t something you need to establish as well. At Morris Hall, however, we recommend having both! One of the biggest differences between a will and a trust is that a trust can be put into effect while you’re still living. There are myriad trusts one can set up, but we’ll outline two of the most common.
- Living Revocable Trust – While you are still living, you can have a trust set in place. In the event you become incapacitated in any way (illness, injury, etc…), your trust names a successor trustee. This person becomes responsible for making decisions on your behalf. The successor trustee has the trust to refer to in order to help them be informed of your wishes if you are unable to communicate them yourself. Additionally, if you do end up passing away, the successor trustee maintains control of your assets without any disruption, or period of probate. When you set up a revocable trust, you have the power to make changes at any time.
- Income Only Trust – Another common form of trust is the income only trust. When considering your estate planning with Morris Hall, you may benefit from this type of trust if you need to preserve your assets and maintain access to the income they generate. There can be a lot to understand in this trust and as AAEPA members, Morris Hall is ready to help you sort the details.
- Probate – A trust is typically a way for eventual beneficiaries, or recipients, of the trust to avoid legal proceedings after your death. With a trust in place, the successor trustee usually has immediate power over your estate and can take the necessary action to transfer your assets to the beneficiaries. Avoiding probate is ideal for those who wish to maintain privacy regarding their estate.
- Special Co-Trustee – Another element of a living revocable trust is a special co-trustee. This person can help facilitate the management of the trust. In the event there are disagreements about the terms of the trust, the co-trustee has the authority to act as a mediator or to make final decisions. To remain impartial, it is recommended that a special co-trustee is not someone related to you, or to any of your beneficiaries.
We understand it may be uncomfortable to have these conversations now with loved ones, but making will and trust decisions well in advance of your death is one of the best gifts you can give. Your beneficiaries will be grateful they have less to worry about at the time of your passing, as you will have provided clear instructions for not only your funeral but anything of value as well.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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