A will is a legal document that outlines what happens to a person’s estate after they pass away. A trust is much like a will. It helps determine where assets are distributed after someone dies.
Initially, you may believe that a will is better than a trust. After all, it seems like a trust only covers one thing, while a will covers many. However, there are several benefits to setting up one or more trusts even if you already have a will.
Avoiding probate
When a person passes away, more often than not, a process called probate starts. Probate gives interested parties time to review, verify and complete any necessary steps before an estate is distributed, such as validating a will, paying debts and contacting beneficiaries. As a result, probate can take many months – meaning heirs may have to wait before they see any inheritance.
However, a trust can avoid probate. A living trust, for example, can allow beneficiaries to collect their inheritance more quickly and easily.
Circumventing estate taxes
Depending on where the deceased lived and how much an estate is worth, there may be estate taxes taken from their assets after they pass away. While some estates are too small to be taxed, there is a possibility of it happening. Some people, as a result, will set up trusts, which can sometimes circumvent estate taxes.
Putting conditions on inheritances
There are some cases where people don’t want their heirs to inherit everything immediately. A will, however, may not be able to control when or how assets are given to beneficiaries. A trust, on the other hand, may have clauses in place to prevent that. For example, you could give an inheritance to a child once they reach a certain age.
If you believe a trust is right for your estate, then you may need to understand all of your legal options.