Part of the estate planning process is ensuring that your assets go to the right people—and that your beneficiaries can receive those assets with minimal legal disruption. Without the proper estate planning documents, the legacy you leave behind may be caught up in probate courts, rather than going directly to your kids, grandkids, or other beneficiaries. Clearly, these documents are important—but which ones do you need, exactly?
Most people are familiar with the will and with the trust, but not necessarily with what differentiates these two documents. We’ll briefly compare and contrast them here.
What’s a Will?
A will is a document that does four basic things: It gives instructions on how you want your assets to be handled following your death; it identifies your beneficiaries; it names your executor, if you choose one; and it identifies the guardians you wish to continue raising your children, should you die when they are still minors. If you die without this legal document in place, it falls strictly to the court to distribute your assets and properties and to choose who takes care of your children—not at all an ideal scenario.
What’s a Trust?
A trust, meanwhile, is a legal relationship in which a person (or a company) holds property for another; there are many different types of trust, but they all essentially involve a transfer of legal guardianship for physical or financial assets.
A trust is important because it helps avoid the assets in question going through probate court—and indeed, without a trust, the assets you leave behind will generally become embroiled in legal run-around.
Neither one of these documents, on its own, is sufficient for providing a meaningful legacy for your beneficiaries, and for helping them to avoid the probate process. Both should be used simultaneously to ensure your estate is properly cared for. To learn more, we invite you to contact the estate planning professionals at the Singh Law Firm today.