You know that wills and trusts are both valuable estate planning tools, but once is the difference? Do you need them both?
A will is a blueprint of what you want to happen after your death. If you have minor children, the will is where you will name their guardian. You can express your funeral wishes. It’s also the place where you can tell your executor who you’d like to inherit everything from your home to your coin collection and whom you’d like to care for your beloved cat.
A trust can take different forms.
- A revocable living trust is the most common type. You create the trust and move your larger-valued property into it – your house, for instance. You maintain control of the trust while you’re alive. You can change the trust and add or withdraw property.
- An irrevocable living trust is just that — irrevocable. Once you put property into it, you place it in the control of a trustee. This can be a wise move for people with significant wealth and assets because it has a positive effect on taxes.
- A testamentary trust is part of your will. It takes effect upon your death.
Wills are part of the public record and could require probate through the court system before any assets can change hands. Property covered under either revocable or irrevocable trusts doesn’t need to go through probate, and the contents are kept private.
This is just a primer on wills and trusts. You could need both, but the only way to know for certain is to consult with an experienced estate planning attorney to discuss the specifics of your situation. Once your plan is created, you will be relieved to know that you have done what you needed to do to care of your family.