Wills and trusts are the backbones of estate planning. They are the blueprint of your family’s future, and thus, must be crafted with the utmost care. Many have a rough draft of a will prepared already, or at the very least have thought about what they may outline in one. However, few are educated on the full array of options within their reach. There are various types of wills and trusts, and it is essential to ensure that you not only select the best choice for your needs but that you compose it in such a way that potential problems are eliminated.
The Risks of Not Documenting Your Wishes
When you pass on without a will or trust, state law governs how your assets are administered and distributed. This means that you do not decide who will be the executor of your estate. An administrator will be appointed at the time of your passing, but he or she may not be the person you would have chosen, and the election process may place unnecessary stress on your family. Furthermore, your possessions and finances may not be distributed how you would have liked for them to be. Intestacy rules govern whom your assets are handed over to, and in what proportions, in the event that no estate planning documents are intact. These laws typically mandate that your belongings are given to your spouse and children, which can be problematic if you intend to pass on any inheritances to close friends or other family members, or if you wish to exclude anyone in your immediate family as an heir. Read more about the documents below to determine which one may best prevent future challenges for you and your family.
How a Trust Can Help
In addition to what has already been addressed, one of the biggest advantages of trusts is that they prevent your family from having to undergo the lengthy and costly course of probate at the time of your passing. Probate is the legal process of validating a will, and most like to avoid it if at all possible because it makes the record of your estate and financial status available to the public. Trusts are private and also give you the freedom to appoint yourself or an industry expert, such as a financial planner, as the first trustee. Moreover, trusts are comprehensive documents that are easily amendable. With a trust, you may stretch out distributions to beneficiaries over a period of time and protect your heirs against creditors and those who may wish to prey upon them financially. Last but not least, a trust gives you the option to include a “pour-over will” that covers anything you leave out by mistake.