Why Should I Consider a Trust instead of a Will?
At Inhulsen Law, we understand the complexities of estate planning and are dedicated to guiding you through every step. Our approach is to equip you with a comprehensive plan that is right for you. Many clients ask why a trust may be more helpful than just a will. Here’s why a trust-based plan might be the most advantageous for you.
Understanding Trusts
A trust is a legal entity created to hold property, and it can hold all types of assets, from real estate to cryptocurrency. The trusts that people use to avoid estate taxes and protect money for spendthrift relatives are irrevocable trusts, which means that they cannot be changed. Once you put property into an irrevocable trust, you cannot take it back out.
The type of trust that has become increasingly popular to use in place of a will is different–it is a revocable trust. This type of trust can be canceled or changed easily, and property can be moved in and out without any restrictions.
Once property is put into a trust, it is controlled by a trustee and distributed to trust beneficiaries. With a revocable living trust, most people serve as their own trustee and enjoy the use of the trust property as the primary beneficiaries. So once they set up the trust and transfer property into it, they continue to manage and use the property just as they did before. It seems like a lot of effort, but the benefits come later.
The Strategic Advantages of Trust-Based Estate Planning
A trust is a robust legal instrument that holds and manages your assets according to your specific wishes. While a will is a directive for distributing your assets after death, a trust offers nuanced control and privacy, both in life and beyond.
- Avoiding Probate: The primary reason people choose to build their estate plan around a revocable living trust rather than a will is that when they pass away, their loved ones can avoid the legal and financial headaches of the probate process. If you leave all your property through a will, the person named as executor must petition the probate court for authority to administer your estate. Then the executor has to follow numerous legal procedures, including filing an inventory with the court, publishing notice to creditors, and opening bank accounts for the estate before they can begin the process of paying bills and handling other issues. It often takes many months or even a year or more before beneficiaries of the will receive any property.
If you place your property into a trust instead, then when you pass away, the person who is designated as your alternate trustee can manage your final affairs without the need to seek approval from the court. The trustee pays final bills and then distributes property to the alternate beneficiaries. The process is quick and easy.
- Continuous Management: Should you become incapacitated, a trust ensures uninterrupted management of your assets. The successor trustee you choose will manage your estate, an assurance a will alone cannot provide.
- Privacy Preservation: Did you know that when a will is admitted to probate, it becomes a matter of public record? Anyone can delve into your family’s affairs and find out who received property and what they received. This is not the case when property is distributed through a trust. The only people who ever need to know the terms of the trust are the trustee and beneficiaries. Financial institutions will sometimes need to see trust documents for authorization purposes, but you can have your attorney prepare a certification of trust that satisfies the need for verification without revealing private terms.
- Flexibility: A revocable trust allows you to adjust your plans as life changes, providing a dynamic tool that a static will cannot offer on its own.
The Essential Role of a Will in a Trust-Based Plan
Despite the advantages of trusts, at Inhulsen Law, we believe in the necessity of a will within your estate plan. A will serves as a safety net, ensuring that any assets not placed in your trust are still distributed according to your wishes.
- The Pour-Over Will: A ‘pour-over’ will captures any overlooked assets and ‘pours’ them into your trust upon your death, ensuring your estate plan is all-encompassing.
- Guardianship and Final Wishes: Wills are crucial for appointing guardians for minor children and expressing final wishes that a trust is not designed to address.
Discover the Right Plan for Your Situation
At Inhulsen Law, we build estate plans around both trusts and traditional wills, so we understand the benefits and drawbacks each type of plan provides in various situations. If you’d like to discuss which option might be best for your needs, just call 616-747-0000 or contact us online to schedule a consultation. We’re here to secure your legacy with a tailored estate plan that reflects your wishes, cares for your loved ones, and stands the test of time.
