It is commonly known that having a will is important if you have a preference regarding who you want to inherit your property and assets when you die. Many people in Charlotte have taken the wise step of executing a will. But is a will their only estate planning tool?
What is a trust?
A trust can be a useful companion to a will. Like a will, a trust is a way to name who you want to inherit which assets once you die. Trusts can be irrevocable or revocable. If you have an irrevocable trust, you will place your assets in the name of the trust effectively setting them outside your control. This means they will be available to be passed on to your beneficiaries as you wish. If you have a revocable trust, you can fund the trust with your assets, but you remain in control of them while you are still alive. Revocable trusts also hold assets safe until the time comes to disburse them. Trusts are managed by a trustee.
Why would I want both a will and a trust?
Unlike wills, trusts bypass the probate process. A will must be probated in court, which can be time-consuming and expensive. Trusts can also come with contingencies. For example, you can include provisions in your trust that prevents a beneficiary from inheriting until they reach a certain age or achieve a certain life goal that is important to you. In addition, there are many different types of trusts, including charitable trusts, special needs trusts, asset protection trusts and more. Trusts also provide more protection from the estate tax than a will does. Simply put, a will can achieve the basics, but a trust can achieve so much more.
Make sure you have a well-rounded estate plan
As this shows, a well-rounded estate plan often includes both a will and a trust especially if you have significant wealth to pass down once you pass on. However, estate planning is about more than just money. Other essential elements of an estate plan include health care and financial powers of attorney and an advance care directive. Estate planning can become very complex very quickly, so it is important to seek the help you need to make sound decisions that meet your needs.