Trusts and wills are both estate planning tools that essentially allow someone to designate what happens to their property when they pass away. While they might seem similar at first glance, they are implemented quite differently. Our Lancaster estate planning team tells you everything you need to know about trusts and wills below.
Trusts are unique in the sense that they have the capability to accommodate a variety of different circumstances. These can include the amount of heirs/beneficiaries you have, tax implications, and even business interests.
Once a trustee is appointed to take responsibility for all the assets placed within the trust, you are able to place as much or as little of your property into it as you wish. Additionally, you are able to access your trust assets at any point in your life to use or spend them as needed.
They also provide protection against the incapacity of the trustor and beneficiaries, as well as hold plans for healthcare and end-of-life provisions.
There are a number of different types of trusts capable of meeting several needs and wishes. Some of the most common include:
- Revocable living trusts
- Special needs trusts
- Charitable trusts
Revocable living trusts allow the trustor to transfer their property to the trust via the appointed trustee. They allow for the trustor to change, terminate, or alter the terms of the trust throughout their lifetime.
Special needs trusts can be established by family members and organizations to provide long-term funds and care for individuals with special needs. The beneficiaries of special needs trusts are also still able to receive government benefits in tandem with funds from the trust without conflict.
Charitable trusts are utilized when someone wishes to directly benefit a non-profit organization or charity upon their passing. Individuals with low basis assets, such as stocks or real estate, are able to establish these trusts. Donors are able to sell their assets without taking on any capital gains taxes when the trust is funded, and are often recognized by the charities themselves.
The biggest benefit of trusts, by far, is the ability to avoid the probate process entirely. Due to the fact that they are very difficult to challenge, trustors can be confident that their families will not need to go through lengthy and stressful litigation proceedings when they pass away.
Wills are some of the easiest estate planning documents to produce, taking around six to eight months to fully finalize. At their core, wills are designed to designate where one's assets go and who receives them upon their death, or even appoint a guardian for a minor child. An executor is also appointed to make sure the wishes outlined in the will are carried out, and all assets are properly distributed.
There are four fundamental types of wills that allow you to specify which beneficiaries receive which assets.
Simple wills are just that, simple. All they require are names, addresses, marital statuses, and instructions about the beneficiaries and assets.
Living wills, also known as advance medical directives, outline instructions for medical care should the individual become incapacitated or unable to make decisions for themselves.
Joint wills are primarily utilized by married couples planning to leave their estate to their spouse. Once the first spouse passes away, the estate is left to the surviving spouse, and will be distributed to their beneficiaries after the surviving spouse passes away.
Testamentary trust wills act similarly to regular wills, but hold a provision that places a specific portion of one's estate into a trust. Beneficiaries will then receive these assets through the designated trustee.
One factor to keep in mind when pursuing a will is the expectation of probate. Beneficiaries, or even those who believe they were purposefully left out of the will, have the ability to challenge the will's validity. Probate is the legal process designed to settle any disputes and prove the will's authenticity before distributing assets. The probate process has the ability to become quite lengthy and stressful, and it is important to contact an attorney to make sure the process runs smoothly.
Contact Our Lancaster Estate Planning Team Today
Planning for the future is important. We understand that ensuring your loved ones are cared for is a top priority, and we are prepared to put our experience to work for you.
If you would like to learn more about how we can help you get started on your estate plan, don't hesitate to contact us today through our website or give us a call at (661) 426-2499 to schedule a consultation!