Estate planning is one of those touchy subjects… it involves a whole host of unpleasant, yet very necessary conversations with family members.Wills and trusts can be very confusing but Parry & Pfau is here to break it all down for you.
After you die your estate plan (if you have one in place) goes into effect. Essentially it is a step-by-step process for your inheritance; where everything goes, when and how. And yes, even if you are a person of modest means, you too have an estate to think about.
Estate planning is crucial because it provides protection over your property and assets when you yourself can no longer do the protecting, because of a little thing called death. So between wills and trusts what should you draw up?
A will is a written document that designates where your assets go upon death. It allows you to leave behind specific items (property, a car, money, antiques, etc.) to a certain person or organization that you’ve named as beneficiaries. It also gives parents the opportunity to name guardians should they pass away while their children are still minors.
Wills also have an executor, the person which carries out your wishes upon death.
In a perfect world everyone would have at least a simple will, but many do not see the importance. If you do not have valid instructions about how to handle your estate, the state in which you live could end up making those decisions for you.
A living trust can be more expensive than a will, but it can sometimes start benefiting you before-death.
When you are alive you will transfer your property into a living trust. Should you die and have other assets that were omitted they can get into your trust through a “pour-over will.” (We never draft a trust without a pour-over will behind it.)
A trust is used to manage your property before AND after your death, as well as instruct how those assets (and the income accrued by the trust) are doled out when you die. Should you become incapacitated, disabled or enter a coma, the trust serves to manage your financial affairs.
A living trust is revocable and allows you to make changes throughout your lifetime. Another major difference between wills and trusts is that a trust is not subject to probate, meaning all provisions remain private. (Many are shocked to learn that a will does actually go through probate.)
Whether wills or trusts, both can protect your assets in different ways. The only way to determine which estate planning strategy is right for you is to meet with an attorney.
Contact us today and we’ll help you start planning for a safer, more secure future for you and your family.