A Deeper Look into the Differences between a Trust and a Will
Though it is difficult to think about, you have to think about the inevitability of death and how it can affect your loved ones. What will happen to your assets when you are gone? Will your kids and spouse be provided for? The good news is that you can ensure they are taken care of and your assets are distributed responsibly by creating a trust or will during estate planning in Manhattan.
To understand which option will be in your best interest, you need to understand what each offers.
What is a Will?
A will is a legal written, signed and witnessed document that details how you want your property or assets distributed after you pass away. A will does not take effect till your death after which it becomes part of public record after going through probate.
What you want to include in this document can differ from what another individual may want, but most wills should have the following information:
- The name of the executor who will be responsible for getting your will authenticated by the court and for managing your estate as per its terms.
- The names and details of your beneficiaries i.e. the people who will inherit your estate or assets.
- Your personal details such as your bank account information and the location of your estate so that the executor can determine its worth and how it is to be distributed.
- The guardian who will be responsible for your minor children (if any). In most cases, the spouse is often chosen as one.
The best thing about a will is that it can be updated to reflect changing requirements and your personal preferences while you are estate planning in Manhattan. So if you split from your spouse or you have a grandchild on the way, you can exclude the former and include the latter.
Benefits of a Will
- If you don’t have a large or complex estate, a will is ideal for you. For example, if you don’t have a large fortune or just want to make sure some valuables make it to your kids, drafting a simple will should be enough for your needs.
- Wills cover your entire estate and drive probate as well while trusts only cover assets.
- Wills can be used to distribute proceeds from life insurance in case the beneficiaries pass away before your demise. This includes retirement accounts, checking account and savings accounts all which can become part of your estate.
What is a Trust?
An estate planning lawyer in Manhattan may also suggest that you get a trust made. A trust details how your estate will be managed after your demise. You can either serve as your own trustee or one will be assigned upon your death or in case you are incapable of doing so yourself. Unlike a will, the court does not get involved in a trust.
Since it is managed by a successor trustee, this document does not need to be authenticated by the court and the assets can be distributed without its intervention.
There are basically 2 types of trusts you can opt for namely revocable and irrevocable trust. The former allows the owner the freedom to make alterations and even cancel the trust whenever they want and the latter blocks intervention completely.
Benefits of a Trust
- Unlike a will which has to go through the court for authentication post your demise, a trust is not subject to probate proceedings. In other words, your trustee will not be confronted by beneficiaries or need to provide proof of its validity. The trustee has the legal right to manage and distribute the assets and funds as they are mentioned in the trust upon your death.
- You can ensure that the inheritance that you want to bequeath to beneficiaries does not reach their creditors. You cannot guarantee this in a will.
- Assets that are mentioned in a trust are kept from the public. Assets that are mentioned in a will on the other hand are examined by tax authorities so that they can determine their value.
The bottom line is when you are estate planning in Manhattan you should take a good, long look at your assets and family relations first. This will help you decide whether you should maintain a will or create a trust. Irrespective of the decision you make, you should hire the best estate planning lawyer in Manhattan to help you through it.