When to Choose a Trust Over a Will
It can sometimes be difficult to determine the difference whether it is better to have a trust or a will to handle the disposition of the bulk of your assets. How do you know which one will work best for you? Well, like every other legal question: it depends. Trusts can be extremely beneficial to those who have young minors and would like to ensure their children will be well cared for. A trust will allow the parent to provide for their children as generally or specifically as they’d like and puts a trustee in charge so the minor beneficiary doesn’t spend all the money foolishly before they understand the importance of financial management. Parents can make a trust the beneficiary of their life insurance policies or retirement accounts (which don’t pass through a will) and then the trustee can manage the policies for the minor children.
Trusts are also beneficial for singles who have assets solely in their name. When the single creates a revocable living trust, all assets can be managed through the trust and avoids the need for the hassle and costs associated with probate court. Determining whether or not one needs a revocable trust depends on the value of the estate, and varies by states across the U.S. If the estate is valued low enough, there may not be a whole lot of hassle or fees associated with probate; however, if the estate has a high value, it would be more effective to create a revocable trust.
Other scenarios where trusts would be more beneficial include those who are in second or later marriages, to save on taxes as a married couple, or just to keep your personal family business private. For those in second or later marriages, wills can become tricky with several children, step-children, and grandkids. In order to avoid the mess of contesting a will, a revocable trust can solve all of those problems. Married couples can also use a trust depending on their incomes to avoid unnecessary tax liability. Lastly, when you probate a will everything becomes public record. For the more private families who don’t want their personal business becoming public, a trust can alleviate those concerns.
When you’re unsure of how to proceed choosing between a trust or a will, contact us and we can evaluate your situation and guide you to the best option for you.
