Individuals often gravitate toward the bigger assets in estate planning, such as a home, motor vehicles, and/or family heirlooms.
A will is certainly a valid approach to those estate planning items. Directions in a will can easily explain how an individual wants specific assets divided among his or her heirs. A will can also include a catchall provision governing the disposition of personal property, such as clothing and furniture. Wills can even name an executor who will be responsible for paying the estate’s final bills and attending to its final administrative matters.
Yet do you really want the details of your estate to become a matter of public record? A will must go through probate and requires court involvement to administer the estate. Assets in a trust, in contrast, pass directly to the beneficiaries without involving either the public or the court.
Although setting up a trust may require the expertise of an attorney who focuses on estate planning, there are distinct advantages to this approach. First, the grantor who created a revocable trust can serve as its trustee during his or her lifetime. Although property might be titled in the name of a revocable trust, the grantor/trustee could amend it or even cancel it at will. In the event of incapacity or death, the individual named in the trust as the successor trustee would assume control of the trust. The trust document typically specifies that the revocable trust becomes irrevocable upon the grantor’s death.
A revocable living trust also provides an opportunity to consolidate various types of assets. For example, life insurance and retirement benefits are generally not considered part of an estate. Consequently, those assets bypass the probate proceeding and instead pass directly to the named beneficiaries in the contracts. With a living trust, however, the trust could be named as the designated beneficiary. Thus, the trust property could contain a variety of different asset types.
Check out our firm’s wills & trusts page to learn more about estate planning and various trust options.
Source: Washington Post, “How to pass money on to your children,” Jonelle Marte, Nov. 3, 2014