Using a Trust vs Leaving Assets to Heirs in a WillSaturday, August 15th, 2020, 9:01 am
You can leave assets to your heirs in two different ways: through a will and through a trust. Both have their pros and cons, and neither is inheritably better than the other. If you’re beginning the estate planning process, it’s important to understand how these two options differ so you can determine which one works best for you.
Leaving Assets in a Will
A will is the easier of the two options. Creating a will is a fairly straightforward process, and it can be changed at any time. In your will, you designate the person who will serve as your estate’s executor. This means they will be in charge of settling any debts against the estate and following all of your written wishes. You also list out specific assets and whom those assets should go to.
There are a few downsides to a will. First, people can challenge your will. If someone feels like they deserved more of your estate, they can go to court and attempt to get your will invalidated. There’s also nothing legally protecting your assets from creditors or tax laws. This means much of your estate could actually go to cover any debts you own.
Using a Trust
With a trust, however, you can rest assured knowing that creditors cannot lay claim to any of the assets there. That’s because the trust is a separate legal entity from you as a person. The trust doesn’t owe these creditors anything—you did. You also have more control over the assets placed in the trust. You can specify that your heirs cannot touch the money until they reach a specific age or that they can only use it for a specific use. For example, it’s not uncommon to leave a college trust fund that your heirs have to use for school expenses.
Trusts do take more work to create. You also have to appoint a trustee. This is a person who will oversee the trust after you die. They will have this responsibility until either the heir is allowed full access to the trust or until the trust expires. It all depends on the type of trust you create.
Which Is Right for You?
If you’re not sure which option is right for you, we’re here to help. Call Michael F. Kanzer & Associates today to schedule a free consultation.