Both wills and trusts are estate planning tools that can be used to pass assets to your loved ones upon your death. However, trusts come with some distinct advantages over wills that you should consider when creating your estate plan. At North County Legal, we use a variety of mechanisms to create the best plan for you, based on your needs.
When comparing the two estate planning tools, it’s not likely that you will be choosing between one or the other. Most plans include both, with some assets being passed by will and others being passed by trust. While there is no doubt that a will is a foundational part of every estate plan, consider combining your will with a living trust to avoid the blind spots that are typical in plans that rely solely on a will.
Here are four reasons you might want to consider adding a trust to your estate plan:
Avoiding the Probate Process in Court
One of the primary advantages of having a living trust is that it eliminates the need for probate, whereas the probate process is necessary in the administration of a will. Probate is the court process through which assets left in your will are distributed to beneficiaries upon your death.
Probate proceedings can drag out for months or even years, and your family will likely have to hire an attorney to represent them, which can result in costly legal fees that will be deducted from your estate instead of given to your loved ones.
The fact is that if your estate plan consists of a will alone, you are guaranteeing that your family will have to go to court if you become incapacitated or when you die.
If your assets are titled properly in the name of your living trust, your family will be able to avoid court altogether. Assets held in a trust pass automatically to beneficiaries upon your death, without the need for any court intervention. This can save your loved ones major time, money, and stress while dealing with the aftermath of your death.
In addition to being costly and time-consuming, probate is a public process. Once in probate, your will becomes part of the public record. This means anyone who’s interested can see the contents of your estate, who your beneficiaries are, as well as what and how much your loved ones inherit, making them possible targets for frauds and scammers.
Using a living trust, the distribution of your assets can happen in the privacy of our office, so the contents and terms of your trust will remain completely private.
A Plan for Incapacity
A will only allow for the distribution of your assets upon your death. It offers zero protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. If you become incapacitated with only a will in place, your family will have to petition the court to appoint a guardian to handle your affairs
Guardianship proceedings can be costly, time-consuming, and emotionally devastating for your loved ones. Consider that there is a possibility of the court appointing a family member you’d never want making such critical decisions on your behalf. In some instances, the court may even select a professional guardian, putting a total stranger in control of crucial decisions that can affect you and your family in the long term.
With a living trust, you can include provisions that appoint someone of your choosing to handle your assets if you’re unable to do so. Combined with a well-drafted medical power of attorney and living will, a trust can keep your family out of court and conflict in the event of your incapacity.
Enhanced Control Over Asset Distribution
Another advantage a trust has over just having a will is the level of control they offer you when it comes to distributing assets to your heirs. By using a trust, you can specify when and how your heirs will receive your assets after your death.
During the estate planning process, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. You may choose to spread out the distribution of assets over a beneficiary’s lifetime, rather than them receiving a lump sum all at once. You can, for example, opt that a child receives a percentage after graduating college and then varying percentages at different phases of their life as they continue into adulthood.
In this way, you can help prevent your beneficiaries from blowing through their inheritance all at once, and offer incentives for them to demonstrate responsible behavior. Additionally, as long as the assets are held in trust, they’re protected from the beneficiary’s creditors, lawsuits, and divorce, which is something else wills don’t provide.
If, for some reason, you do not want a living trust, you can use a testamentary trust to establish trusts in your will. A testamentary trust will not keep your family out of court, but it can allow you to control how and when your heirs receive your assets after your death.
Making an Informed Decision
The best way for you to determine whether or not your estate plan should include a living trust, a testamentary trust, or no trust at all is to meet with your attorney at North County Legal for a Family Wealth Planning Session. During this process, we’ll take you through an analysis of your personal assets, your family dynamics, what’s most important to you, and what will happen for your loved ones if you become incapacitated or die.
You and your family deserve the confidence and peace of mind that come with a thorough estate plan. Contact us to schedule your appointment to get started.