Arguably, the most important document in an estate plan is a will. A will is a legal document that instructs your last wishes, including who is responsible for distributing your assets and who should benefit from your estate.
A will is not the only document you can add to your estate plan. Another commonly added document is a trust. A trust is a legal document that arranges for a trustee to manage your assets and distribute them to beneficiaries as instructed.
While a will and a trust can sound very similar, there are advantages to adding a trust to your estate plan. Here is what you should know:
How does a trust help you and your loved ones?
While a will can help clarify how your assets should be managed, it is not perfect. A will is susceptible to probate. Probate can delay when beneficiaries receive assets. Beneficiaries may not see their inheritance for several months to over a year after you pass away. This can lengthen the grieving process for loved ones.
With only a will, your estate could also be taxed. The size of your estate can determine just how much it is taxed. Estate taxes can reduce the size of your distributed estate.
Your will could also be challenged. If someone, such as a disgruntled heir, believes that a will is invalid, created under undue influence or made under duress, then they may dispute your will. A disputed will can lengthen the probate process and prevent your last wishes from being met.
With the right kind of trust, you could protect your estate and continue to provide for your loved ones even after your passing. Legal guidance can help you plan a trust that works for your needs.
