While most people know about the need to have a will, many are unaware of the other documents that could be part of their estate plan. Creating an estate plan as unique as your family and your goals often depends on exploring all your options, including wills and trusts. What can a trust do for you and your estate?
Wills and trusts can work together to create a more comprehensive plan.
Wills are legal documents that include high-level instructions for your assets, guidelines for your life insurance policy, guardianship of your children and other instructions. Trusts, on the other hand, allow a trustee to hold property and offers specific instructions for the distribution of that property. As Forbes notes, each has unique benefits, and they can work together to make the distribution of your assets more efficient after you pass away.
What benefits does a trust offer?
Because wills and trusts can be used together, you can use a trust to achieve specific goals while addressing other property in your will. Trusts offer you a wide variety of benefits that wills do not, including:
- Avoid probate—While wills go through the probate process, property placed in trust does not. This allows your loved ones to avoid the probate process and maintain their privacy.
- Provide for loved ones who receive disability assistance—Your loved ones can benefit from funds placed in trust without damaging their ability to receive government assistance.
- Minimize taxes—Trusts allow you to reduce estate and gift taxes and minimize the impact they have on your loved ones.
- Protect your assets—Because ownership of assets can be transferred to a trust, that property will be protected from lawsuits or creditors.
- Maintain greater control over your property—If you want to place restrictions on when or how the assets in trust will be distributed to your beneficiaries, a trust allows you to establish those details.
If you wonder how a trust could help you achieve your estate planning goals, speak to an attorney. They can help you explore your options and create a plan that protects your loved ones.