One of the surest things in life is that over time, people acquire stuff. Call it stuff, things, money, property, whatever – the point is that if something were to happen to you and you no longer own or posses this “stuff”, it’d be a good idea to already have a plan in place to disperse your belongings as you wish. This is the idea behind wills and trusts – to have your things divided up amongst recipients as you please, so that you can still have a say in matters once you cannot speak for yourself. Although it seems like something everybody should have, over 66% of Americans do not have a will or trust established in case of their death.
The main difference between a will and a trust is how your stuff is given out to beneficiaries. While a will explains your testament that simply designates who gets what, a trust establishes an intermediary, or trustee, who owns and administers your stuff for the beneficiaries. While a will can contain and establish a trust, a trust typically deals with real estate, shares, or cash.
A trustee can be a company, individual, or organization (such as a charity). For example, if a charity is chosen as a trustee, they own whatever is designated in the trust, but only on behalf of the beneficiaries, which would most likely be friends or family members of the donor. The beneficiaries get a revenue stream for a period of time, and then the charitable foundation gets the remainder of the trust. This is called a “split interest” trust and avoids income and capital gains taxes if it is shared with a charity.
While a will costs less and is easier to create, it will only pertain to the property that is specifically outlined in writing. On the other hand, a trust establishes a trustee that will make any other decisions that need to be made. Other important decisions include the area of health care, such as whether to keep you on life support - a decision that can be very difficult and emotional for your spouse or family to make for you.
Although wills and trusts are a very complicated legal matter, I hope you’ve learned something from this article and are more enlightened as to whether you’ll need just a will or a trust as well. Either way, Walters & Ward Estate Planning is ready to help you. Visit our website today at WaltersTrustInfo.com.
Posts
