Last wills and trusts are totally different. What you need depends solely on your circumstances, as well as personal preferences. But what exactly are the differences between last wills and trusts, and in the estate planning process, how do you decide which is right for you?
What’s a Last Will?
A last will is a legal document that, as part of a comprehensive estate plan, directs who will receive your property at your death. It also appoints a legal representative to carry out your wishes stated in the will after you are gone. You can detail your possessions, and name beneficiaries in your last will. It gives you the ability to choose a guardian if you pass before your children turn 18.
Last wills generally go through a process called probate. Probate is a long and sometimes expensive process, through which the court validates your will and transfers legal title of property from the deceased to his or her beneficiaries. If you die without a will, that means you’ve passed intestate, which allows the court to distribute your property, and determine your beneficiaries as they see fit.
Have questions about setting up a last will? Give us a call today, and our legal experts will happily answer your questions!
What’s a Trust?
A trust, on the other hand, is a legal relationship. It signifies when one person, a trustee, holds property for the benefit of someone else, the beneficiary. A trust can be established to benefit both the trustee or the beneficiary. You do not have to be deceased to have an active trust. A trust goes into effect as soon as it’s established. They are generally more expensive to set up and manage than a last will, but remain private and guarantee immediate action if specified.
Many people think that a trust is only for the wealthy, but that is a misconception. The most common reason people establish trusts, is so that they can keep their property from going through probate when they die. A trust only covers property that’s been transferred to it. Property has to be put in the name of the trustee in order for it to be included in the trust.
How do I Choose What’s Right for Me?
Choosing which option is best for the distribution of your assets varies. It depends on your personal preference, as well as, your circumstances. General things to consider when deciding whether you need a will or a trust are:
- Last wills are less expensive to set up than trusts, but go through the probate process. Probate is a months-long process, and generally not desirable because of how long and expensive the process can be.
- Trusts are more work, and generally more expensive to set-up, but they are effective immediately (according to trust instructions), don’t go through probate, and are private. Trusts are also more desirable for people with multiple properties because multiple properties complicate, and lengthen, the probate process.
- The number of people you are wanting to entrust your property to.
- What kind of property you own, and are dividing.
- Whether you want to actively manage your estate plan, or want a lawyer to do so.
The right option for you depends on just that: you! Here at Capital City Law, we encourage you to consider all of your options, as well as all aspects of your situation. That being said, it can get confusing and overwhelming. If you need a second opinion, or just answers to your questions, give us a call today! Our estate planning experts will help put you in charge of what’s yours.