Two types of estate documents that come up a lot are a Last Will and Testament (Will) and a Trust. Both are important but are strikingly different.
Estate planning is difficult and boring for most people which means it either gets skipped or overlooked. If it is skipped, there is no planning in place and when the investor passes away, the state gets to decide what to do with her money.
Not ideal, right? This is a good way to lose money to taxes and potentially (accidentally) disinherit heirs.
If it is overlooked, there is planning in place but it might not be up-to-date and when the investor passes away, changed laws could make old wishes obsolete and potentially (accidentally) disinherit heirs.
Having estate documents in place allows the investor to control who gets her assets and how the assets will be distributed. Strategic decisions involving estate planning can help mitigate large tax issues, establish a detailed plan for surviving family members, friends, or charities, and put the investor’s mind at ease by formerly designating her wishes.
Two types of estate documents that come up a lot are a Last Will and Testament (Will) and a Trust. Both documents are important but there are striking differences.
WILLS For one, nearly everyone will need a Will while only some people need a Trust. A Will allows the investor to designate how she wants her assets to be disbursed after her death when her estate goes through probate (legal process of deceased person’s estate being distributed.) By creating a Will, the investor takes control of postmortem decisions on how her estate is split between inheritors.
A TRUST is used to accomplish specific goals either while living or deceased. There are many types of trusts to help achieve the desired goal and the investor works with a lawyer to determine which trust is appropriate based on the desired outcome.
A Trust can be established to help special needs heirs, generate income for loved ones, avoid certain estate taxes, and to keep estate dealings private (most probate records are public record.)
To take control of the money you work so hard to earn and invest, make sure you get your estate documents in order. At minimum, most investors will want a Last Will and Testament (including Guardianship provisions for minors,), Medical Directives, and a Financial Power of Attorney.
Every person’s situation is different. This is not legal advice and you should consult an attorney regarding your personal situation.