Wills remain the more prevalent estate planning tool, but trusts have some unique advantages to offer. As such, you should consider looking into how trusts work and whether you can incorporate them into the plans for the future of your estate.
Below are some of the advantages a trust has over a will:
Asset protection capabilities
Unlike a will, a trust can help protect your estate assets. It all comes down to legal ownership. If you transfer assets in a trust, they no longer legally belong to any individual, even the beneficiaries. They are now considered trust assets.
As such, it is much more difficult for them to end up with third parties related to the beneficiaries, such as debtors or spouses. On the other hand, a will cannot protect your estate assets in any way after you are gone.
Trusts help avoid probate, the process a will must go through before assets can be distributed to the heirs. It can be a long and expensive court process, especially if there are issues during the probate process. It can be a lengthy wait for your beneficiaries, and there is a possibility other things could go wrong.
Trusts can be modified to suit a particular purpose, something that wills cannot do. For instance, there is a trust designed to protect your family’s wealth (dynasty trusts), provide for a special needs beneficiary (special needs trusts) or even meet the educational expenses of future generations (educational trusts). In short, it gives you greater control over your estate.
Before getting started
Learning more about how trusts work is advisable if you are thinking of including them in your estate plans. If you have any questions or concerns, seek appropriate legal guidance to help you achieve your goals.