Wills and trusts both serve the same primary purpose: transferring your property to your heirs after your death. Before deciding between the two documents, however, the differences in how function should be carefully explored.
Although both have the same primary purpose, trusts have many unique features which can be custom-tailored based on the needs of the trust creator and when when properly setup and funded, are a quicker, easier, and less time-consuming process to administer after death than an estate plan based around a will.
Advantages of a Trust
In comparison to a will, a trust has various advantages. For starters, a properly funded trust allows your heirs to skip probate, whereas wills are required to go through the probate process. Probate is the procedure through which a court transfers ownership of your assets to the people named in your will. The probate court, for example, would oversee the sale of your home and the distribution of the assets to the beneficiaries listed in your will. Probate can be costly and time-consuming, and if you die and your heirs require fast access to funds, probate will make that difficult.
How to Create a Trust
The first step to establish a trust is to draft the legal documents itself. Once the trust is created, the next step is to identify which of your assets (bank accounts, real estate, automobiles, life insurance, and so on) should be handed to it upon your death. You could even transfer assets to the trust while you are still alive to make asset management easier if you become injured or incapacitated. Your assets will be gathered and distributed (or the proceeds of their sale) to the beneficiaries named in your trust following your death. Because trust administration has no waiting time, your beneficiaries will have considerably faster access to the inheritance you've gifted them.
Another benefit of a trust is that it offers you more discretion over how your possessions are distributed than with a will. If a minor inherits property through a will, the probate court must appoint a conservator to administer the funds until the minor turns 18. Furthermore, the probate court oversees all financial distributions for the minor's health, education, maintenance, and support, including living expenses, school fees, and orthodontia. The court can also use its discretion to prohibit any spending. With a trust, you can name a trustee to make all spending decisions for minors according to your intentions, and you can designate the age at which a beneficiary can take control of his or her inheritance. You can also set up a lifetime trust for your beneficiaries, which will shield their inheritance from creditors and provide other benefits.
Another advantage of a trust is that, unlike a will, the provisions of a trust remain confidential. Anyone can read the provisions of your will or the circumstances surrounding its administration because probate procedures and papers are public record. However, because a trust is a contract, the distribution and terms of your estate are private, and the facts, such as the nature and value of your property and the identities of your beneficiaries, are not available to the public.
When a trust is properly created and funded, it is usually simpler, faster, and less expensive means to distribute assets to beneficiaries, when compared to a will, especially if minor children are involved.
Shoreview Minnesota Trust Attorney
If you have any questions or would like to schedule a consultation, contact Heritage Law Office at 414-253-8500 or send us a message.