Essentially, trusts and wills serve the same purpose – passing on your estate to your beneficiaries after you are gone. However, you need to carefully consider your objectives before settling for either of the two. A will is a legal document that expresses your wishes on how your property will be distributed upon your death. At the same time, a trust delegates your property to a third party to benefit the designated beneficiaries.
A trust offers several advantages over a will, as detailed below.
Your heirs will avoid probate
Probate is a court process of administering a decedent’s estate. Since it is a court process, it costs money and may take time to conclude, inconveniencing the beneficiaries.
A will cannot protect your estate from creditors
Irrevocable trusts protect your estate from creditors since you are no longer the legal owner of the property. That way, your beneficiaries’ financial futures are more secure, unlike under a will where creditors may attach the property to recover debts.
A trust can reduce taxes on your estate
Your beneficiaries will pay fewer taxes if your estate is under a trust. Because they do not legally own the property, they may avoid paying taxes like estate ones, thereby saving money.
A trust gives you more control over your property than a will does
Usually, you can exercise greater control over the distribution of your estate using a trust. For instance, you may specify the age at which the beneficiary can take control of their inheritance which is not so straightforward under a will. In addition, a trust offers some sense of privacy, unlike a will. The terms and conditions thereof are only private to the parties involved.
Making the right choices regarding your estate plans is very important. Setting up solid estate plans will avert potential court battles over your property once you are gone.