Choosing Between Wills and Trusts In Your Estate Plan
An experienced estate lawyer can help you prepare for the future.
When you are creating an estate plan, there are a lot of decisions to be made about the protection and distribution of your assets. Wills and trusts are common components of estate plans, and both are ways to transfer assets to your heirs. But which one is right for you? Or should you consider using both?
What to know about wills
A will, or Last Will and Testament, allows you to specify how you would like your assets – such as property, bank accounts, and personal belongings – to be distributed among your beneficiaries or heirs. You name someone who will act as your personal representative to carry out the terms of the will after you are gone.
There are certain advantages to having a will. You have the option of designating legal guardians for any minor children you have. A will can help reduce family conflict and minimize disputes. And it can help expedite the probate process, preventing your assets from being tied up in lengthy legal proceedings.
But a will also has certain limitations. It may not apply to community property, property held in joint tenancy, and life insurance benefits with named beneficiaries. Under Arizona law, surviving spouses and minor children have certain protections regarding the distribution of assets.
What to know about trusts
A trust is a legal entity that holds and manages assets for the benefit of beneficiaries you name. Trusts can be revocable or irrevocable. The terms of a revocable trust can be changed at any time, and special provisions can be included. An irrevocable trust can’t be changed once it is created, and can only be used in the manner specified.
There are many benefits to establishing a trust. They are flexible and can be customized to meet your needs. There are special needs trusts, credit-shelter trusts, generation-skipping trusts, and other types. Trusts can help reduce estate and gift taxes and help your family avoid probate for most of your assets. They can also help to protect assets from creditors.
Trusts can be complex and require very specific language. There can be substantial costs involved in setting up and maintaining a trust. And you may lose control of assets once they are placed in a trust.
Is a will or trust right for you?
When creating an estate plan, there are many things to consider. For example:
- Complexity of assets: If your estate includes a mix of properties, investments, and businesses, a trust can offer more flexibility. But a simple will may be enough if you have a fairly straightforward estate with few assets and beneficiaries.
- Privacy concerns: A trust offers privacy and helps you keep your financial affairs confidential, while wills become part of the public record when they go through probate.
- Children: If you have minor children, a will is needed for appointing guardians. But a trust can help you choose how and when they will receive their inheritance.
- Incapacity planning: If you are planning for the management of your assets should you become incapacitated, a trust can allow you to provide detailed instructions. The terms of a will only take effect after death.
Your unique goals and wishes can help determine whether a will, trust, or both become part of your estate plan. An experienced Arizona estate lawyer can help you determine whether a will, trust, or both are appropriate for you.
The Law Firm of Brown & Jensen offers personal attention and can help you create an estate plan that meets your needs.
Contact us to schedule a consultation today. Our firm serves clients in Mesa, Tucson, Scottsdale, Chandler, Peoria, Goodyear, Payson, and Show Low.