If offered the opportunity to provide for their family even after they are gone, many people would embrace it. Estate plans provide that opportunity.
An estate plan is a compilation of a few different documents, which parties usually choose according to their needs. People who are creating their estate plans may wonder whether a will or trust would be best for them. The characteristics of the two documents may help in making that decision.
Most people are familiar with wills. These documents allow parties to designate the distribution of their assets in detail, as well as add any stipulations they may desire. For parents of small children or those with disabilities, a will can be quite helpful. As things change, estate holders may modify or replace their wills as they desire. In accordance with the will laws, the will must go through a probate process. During this process, the executor settles all debts and pays any taxes, after which the executor distributes the remaining estate assets as the will designates.
A trust is a form of account set aside for a specific beneficiary that an estate holder may transfer assets to outside of the estate. Once the assets are in the trust, they are no longer a part of the estate, and therefore are not subject to estate taxes. Also, with the trust being a separate entity, it is not as easy to make alterations as with a will; in fact, in some cases, such as with irrevocable trusts, it is not possible to make any changes after the trust is put into place. The different types of trusts have their own stipulations and requirements, which are important for estate holders to understand before establishment.
Although wills and trusts can perform some of the same duties, they are completely different entities. Those debating between the two may benefit from speaking with a knowledgeable attorney.