Anyone with assets needs to plan for the future. This reality holds especially true for people with significant wealth.
Two essential components of estate planning are trusts and wills. Each can play a role in who gets which assets after your death. Despite this similarity, important matters distinguish one from the other. Knowing what separates them will help you decide what to include in each.
A will does not go into effect until after you die. A designee will execute the instructions it contains once you pass. Trusts become effective the moment you sign.
After you pass on, your will might get sent to the court for review in a process known as probate. This legal mechanism assures assets receive distribution according to your wishes. It can be more or less expensive, depending on the nature of your estate planning documents.
With a trust, a trustee takes over the moment you die. This person then manages and distributes funds as you have outlined. Courtroom involvement is unnecessary.
Sometimes, incapacitation occurs when no trust is in place. If you fall victim to this scenario, a judge will appoint someone to distribute your estate. You have no say in whom the court names to have this power.
Trusts allow you to choose a trust manager. One is necessary in case you become incapable of expressing your wishes. Financial decisions will then be the responsibility of this handpicked individual.
Although they cover overlapping concerns, wills and trusts have distinguishing characteristics. Someone with relevant knowledge can help you effectively use both.