As Jennifer researched “Wills” online as she pondered her estate plan. Then she ran across some articles about will-based and trust-based estate planning. After a little more research, she found herself wondering if trust-based estate planning was the right move for her?
Will or Trust?
Actually, you still need a Will whether you choose will-based or trust-based estate planning. However, with a trust-based estate plan, the Will takes second place. To understand this, it might help to understand why people sign Wills and form trusts.
A testator signs a Will to give directions on who will get his or her assets. The Will also names a personal representative to handle the estate. If the testator has minor children, a guardian may be named.
Trusts are often formed to ease the transfer of assets to beneficiaries.
So, why might a trust-based plan be better than a will-based plan?
Privacy
When a Will is filed for probate, it becomes public record. Anyone may go to the courthouse and look at your Will and related documents.
Trusts, however, typically are not filed with the court. It’s likely that your assets will pass to your heirs in a confidential manner.
Speed and Efficiency
Would you like estate to be distributed to your heirs as quickly as possible? If so, trust-based estate planning may be your best bet.
An estate based on a Will must pass through probate. This process can take months and complicated estates may take longer.
However, your trust may distribute your assets very soon after your death. Trust assets generally do not pass to heirs through probate. How quickly the transfer is made depends on the type of trust. Some trusts are structured to last for years, while others terminate upon the grantor’s death.
Taxes
A Will does not lower your estate tax bill. However, trusts are often used to legally divert assets to reduce the size of your estate. This, in turn, typically reduces the amount of tax your estate might have to pay.
Asset Protection
Will do not protect your assets from creditors and civil judgments. Neither do revocable living trusts. However, there are irrevocable trusts that allow you to safeguard your estate, so your heirs receive as much as possible.
Is Trust-Based Estate Planning Best for You?
Comparing Will-based estate plans and trust-based estate plans is difficult.
The attorneys at Virtus Law, PLLC, have the tools and experience to help you achieve the best result possible. To schedule an appointment, call us at 612.888.1000. Our main office is located in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.