For most people, an important reason to create an estate plan is to ensure that their assets are distributed according to their wishes after they are gone. If that is one of your goals, you need to consider how your estate will be administered during the probate process when the time comes. Specifically, you will need to decide if you want to use a Last Will and Testament or a Trust as the primary method of distribution for your assets. To help you decide, the Londonderry estate administration attorneys at DeBruyckere Law Offices explain how a Will or a trust can be used to administer your estate.
Last Will and Testament Basics
By far the most well-known of all estate planning tools, a Last Will and Testament is a legal document that communicates a person’s final wishes pertaining to possessions and dependents. Your Will allows you to make both specific and general gifts. For example, you might make specific gifts of your art collection along with stock in Apple to a designated beneficiary. You could also gift a percentage of your estate to your son. For example, you could gift half of your entire estate to your daughter. Your Will is also where you will appoint someone to be the Executor of your estate. Your Executor plays a vital role in the probate of your estate after your death. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone.
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place.
A trust agreement is also a legal document that serves to establish a trust. Assets held in the trust are distributed by the Trustee according to the terms of the trust. When used to distribute estate assets after the death of a Settlor, the trust terms will tell the Trustee when to distribute assets and which assets to distribute to which beneficiaries.
Last Will vs. Living Trust – How Do I Decide Which Is Right for Me?
Because estate planning typically involves a number of inter-related goals and objectives, it is highly recommended that you consult with an experienced estate planning attorney before making any decisions that impact your estate plan. It may help, however, to consider some of the most common factors that typically go into deciding whether to use a Last Will or a trust as a primary distribution method for your estate assets.
- Avoiding probate – assets held in a trust are not required to go through the probate process. Therefore, those assets will bypass probate and can pass directly to beneficiaries much faster.
- Minor children – a minor child cannot inherit directly from your estate. Therefore, if you are the parent of a minor child, or you plan to have children in the near future, a trust is a better option to guard your child’s inheritance until he/she reaches the age of majority.
- Privacy – because a trust agreement is not part of the probate of your estate, the terms of your trust remain private. Therefore, gifts made using a trust agreement can remain private as well.
- Staggering an inheritance – if you are concerned about leaving a lump sum to a young and/or inexperienced beneficiary, a trust agreement allows you to stagger the inheritance you leave that beneficiary.
Contact Londonderry Estate Administration Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions about using a Will or a trust for estate administration, contact the Londonderry estate administration attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
Yes. You should still have a pour-over Will in place to ensure that any assets inadvertently left out of the trust are “poured-over” into the trust after your death.
Both types of trusts offer benefits when it comes time to administer your estate; however, a living trust can offer additional benefits while you are alive, such as incapacity planning and asset protection.
It depends on the type of trust you created. If the trust is an irrevocable living trust, you cannot make changes once the trust is established; however, for a testamentary or revocable living trust it is often easier to make changes than it would be to make a similar change in your Will.