Wills & Trusts
A Will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a Trust can be used to begin distributing property before death, at death, or afterwards. A Trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a "trustee," holds legal title to property for another person, called a "beneficiary." A Trust usually has two types of beneficiaries—one set that receives income from the Trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
If you have minor-aged children at home, it's important to have a Will that appoints Guardianship of your children. If a Guardian is not appointed at the time of death, your surviving family will have to seek help in a Probate Court to have a Guardian appointed for your children. The person appointed may not be one whom you would have wanted to be entrusted with your kids.
Something else to consider is how you will pass a portion of your estate to a minor child through a Will. A Will places your decisions in the hands of the judge presiding over your estate transfer. Your Testamentary Will carries out your wishes from beyond the grave. A Will also allows you to give insight and direction over the handling of assets your beneficiaries will receive.
A Trust is a fiduciary relationship in which you give another party authority to handle your assets for the benefit of a third party, your beneficiaries.
A Trust is another method of estate transfer. A Trust is created for a variety of functions, and there are many types of Trusts. Overall, however, there are two categories: living and testamentary. A Will can be used to create a Testamentary Trust. You can also create a Trust for the primary purpose of avoiding Probate Court, called a Revocable Living Trust. Within reason, you can address how you would like them to use what you have left them.
Reasons for creating Revocable Trusts during your lifetime:
Property owned in multiple states and the desire to avoid probating in multiple states, thus saving additional court costs and legal fees.
A chance to see how the person you are appointing handles your assets while you are alive, this gives you the chance to assess their performance and make appropriate changes if desired.
You are disinheriting a child and you are worried that the child may contest your Will. A Living Trust makes it much more difficult for the child to successfully challenge your expressed desires set forth in the Trust.
Ease of settling your estate for your heirs. Perhaps they live far away or they are very busy with careers and their own families. Your estate will be settled quicker, Probate will be avoided, and assets won’t have to be collected before they can pass out of the Trust.
Ability to leave assets to a family member who is not closely related to you and/or friends, including second spouses, or domestic partners. In such a situation, the probate process will typically take longer and cost more. The Living Trust can make it easier for everyone involved.