The types of wills and trusts available

The types of wills and trusts available

When you think of estate planning, you probably think of a will or a trust. These documents form the backbone of any estate plan and ensure that the deceased’s wishes regarding his or her assets are met, no matter how many there are. These legal tools are crucial for people seeking to protect their assets, provide for loved ones, and ensure a smooth wealth transition. We enter the world of wills and trusts, clarifying their importance and the different variations that satisfy the different needs that are available through ProSe Legal Service.

Understanding the will

A will, also known as a last will and testament, is a critical document in estate planning. It serves as a model for the distribution of assets after death. In a will, an individual, called a testator, expresses his or her wishes regarding the assignment of assets, the guardianship of minor children and even funeral arrangements.

There are different types of wills, each tailored to specific circumstances. The most common are:

• Simple will: As the name suggests, this is a simple document suitable for people with simple assets. It clearly outlines how resources should be distributed among beneficiaries.
• Joint will: It is a single document created by two people, usually spouses, that outlines their combined wishes. While joint wills can make things easier, they also have limitations, as changes to the document after the death of one party can be challenging.
• Living will: Unlike a traditional will, a living will focuses on healthcare decisions. Describes an individual’s preferences for medical care and end-of-life care, providing guidance to loved ones and healthcare providers.
• Overturned Testament: This type of will is often used in conjunction with a trust. It directs that all assets not already in the trust be “transferred” to the trust upon the testator’s death.

Trusts: The Unsung Hero of Estate Planning

A trust, on the other hand, is a legal institution in which a person (the grantor) transfers assets to a trustee, who manages and administers them on behalf of the beneficiaries. Trusts offer flexibility, privacy and the ability to bypass probate, the legal process for probating a will.
Below are some common types of trusts:

• Revocable living trust: This versatile trust allows the grantor to maintain control over his or her assets during his or her lifetime. It can be modified or revoked as circumstances change and avoids succession, ensuring a smoother transition of assets.
• irrevocable trust: Once established, an irrevocable Trust cannot be modified or revoked without the consent of the beneficiaries. While this limits flexibility, it can offer some tax benefits and asset protection.
• Remaining Charitable Fund: This trust allows the grantor to donate assets to a charity while maintaining an income stream for themselves or their beneficiaries. Combine philanthropy with financial planning.
• Special needs trust: Designed to serve people with disabilities, this Trust ensures that a beneficiary can receive additional assistance without compromising government benefits.
• Testamentary trust: Created by will and activated after the testator’s death, this Trust is often used to manage the estate of minor children or beneficiaries with specific needs.

Pros and cons of creating wills and trusts

Wills and trusts are essential components of estate planning, each with their own set of advantages and disadvantages. Wills, being relatively simple and cheap to create, provide a clear roadmap for the distribution of assets, making them accessible to those with simple assets. They also provide a way to name guardians for minor children, a crucial consideration for parents. However, wills are subject to probate, a potentially lengthy public legal process that can incur additional costs.

On the other hand, trusts offer flexibility and privacy. Revocable living trusts, for example, allow for the ongoing management and distribution of assets, avoiding probate and ensuring faster transfers to beneficiaries. Irrevocable trusts offer asset protection and potential tax benefits, but come with the disadvantage of reduced control for the grantor. Despite their many advantages, trusts tend to be more complex and expensive to set up than wills.

Ultimately, the most complete protection for your loved ones and your estate is often to establish a will and trust. However, depending on your needs, one or the other may not be necessary. It is a personal choice influenced by circumstances, goals and preferences. If you are unsure which document to create for your situation, consult an estate planning attorney for assistance. If you know what you want for your estate plan, another legal professional, such as a paralegal, can help you create your will and trust.

It’s never too early to plan for the future

Wills and trusts are essential tools for safeguarding your inheritance and ensuring that your wishes are carried out. The key is to understand your specific circumstances and goals, which will allow you to tailor these legal tools to your needs. Consulting with the experienced estate planning legal professionals at ProSe Legal Service can provide you with invaluable assistance as you complete your will or trust, turning what may seem like a daunting bureaucratic process into a well-thought-out plan for the future.