Like most people, you probably relied on a Last Will and Testament to take care of distributing your estate assets in your original estate plan. If your estate and/or your family has grown since you created that initial plan, it may be time to consider another option for distributing your estate assets. The Westport estate planning attorneys at Nirenstein, Horowitz & Associates, P.C. offer three reasons to use a living trust instead of a Will to distribute the majority of your estate assets.
How Does a Last Will and Testament Distribute My Estate?
A Last Will and Testament is a legal document that communicates a person’s final wishes pertaining to possessions and dependents. In your Will you can make both specific and general gifts to loved ones, charities, or even your family pet. 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.
How Can a Living Trust Distribute My Estate?
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. As the Settlor of the trust, you have the ability to utilize the trust terms, which you create, to structure the distribution of your estate assets.
3 Reason to Use a Living Trust
While both a Will and a living trust can be used effectively to distribute your estate assets, many people choose to rely primarily on a living trust at some point. There are several reasons why a living trust is often the preferred estate planning tool to distribute assets, including:
- A living trust helps your estate avoid probate. Getting an estate through the probate process can be time consuming and costly. If you use a Will to distribute your estate, the assets gifted in your Will cannot be distributed to the intended beneficiaries until the end of the probate process. This often means your loved ones must wait months, even years, to receive their inheritance. In the meantime, the costs associated with probating your estate will reduce the final value of the assets passed down to your loved ones. Trust assets, on the other hand, bypass the probate process entirely because a trust does not have to be submitted for probate. Consequently, assets earmarked for your loved ones can reach them much quicker.
- A living trust allows you to maintain some control over the assets you gift. When you make a gift through your Will, those assets become the unconditional property of the beneficiary once the transfer of ownership is complete. When you use a living trust, however, to distribute assets you can also use the provisions of the trust to maintain a certain degree of control over the assets you gift. For example, you could require the beneficiary to use the assets to pay tuition. Moreover, because the Trustee of the trust manages the trust assets and administers the trust, you have someone to make sure the trust terms are honored.
- A living trust can protect the inheritance of a minor child. Being a parent to a minor child is a major incentive for using a living trust to distribute your estate because a minor child cannot inherit directly from your estate. As such, any assets gifted to a minor child in your Will must be held and managed by an adult until your child reaches the age of majority. Therefore, a trust is a better option to guard your child’s inheritance because it is set up with a Trustee whose job is to do just that – manage trust assets. A primary difference between using a Will and using a living trust is that you choose your Trustee whereas a judge may end up choosing someone to manage assets gifted to your child in your Will.
Contact Westport Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about using a living trust to distribute your estate, contact the experienced Westport estate planning attorneys at Nirenstein, Horowitz & Associates, P.C. by calling (860) 548-1000 to schedule an appointment.