Estate planning: What are the benefits of a trust over a will?
Wills remain the more prevalent estate planning tool, but trusts have some unique advantages to offer. As such, you should consider looking into how trusts work and whether you can incorporate them into the plans for the future of your estate.
Below are some of the advantages a trust has over a will:
Trusts help avoid probate, the process a will must go through before assets can be distributed to the heirs. It can be a long and expensive court process, especially if there are issues during the probate process. It can be a lengthy wait for your beneficiaries, and there is a possibility other things could go wrong. This is especially true if your will must be probated in different states. Trusts allow properly funded trust assets to be given directly to your beneficiaries. If privacy, processing time and cost are a concern, a Trust may be for you.
While wills often offer more flexibility than many realize, Trusts can be modified to suit additional purposes. For instance, there is a trust designed to provide for a special needs beneficiary (special needs trusts), or to provide for different generations (family trusts). In short, it can give you greater control over your estate in some circumstances. One of the greatest ways a trust is more flexible than a will, is that it can operate in the event of your incapacity, not just your death.
Asset protection capabilities
Unlike a will, a trust can help protect your estate assets in limited circumstances. It all comes down to legal ownership. If you transfer assets into an irrevocable trust, they no longer legally belong to any individual, even the beneficiaries. They are now considered trust assets. As such, it is much more difficult for them to end up with third parties related to the beneficiaries, such as debtors or spouses. On the other hand, you lose significant control over these assets, so an irrevocable trust is only advisable in certain circumstances.
Before getting started
Learning more about how trusts is advisable if you are thinking of including them in your estate plans. If you have any questions or concerns, seek appropriate legal guidance to help you achieve your goals.