You work hard for your money and want to ensure that your wealth distributions go according to your wishes upon your death. Sadly, many people simply don't understand the difference between wills and trusts and how they can affect inheritance. Don’t be one of them! Take control of your wealth distribution by understanding what wills don’t control and the benefits of a trust.
5 Wealth Distributions a Will Does Not Control
Most people believe that a will encompasses and controls all of your assets. That is simply not the case. Proper asset ownership for will-based plans can be confusing. However, the bottom line is that a will only controls assets in individual names; it does not control:
- Trust assets
- Retirement accounts / pension plans
- Life insurance
- Employee benefits
- BONUS: A will does not control anything until you are deceased. That means if you are ever incapacitated, don't expect your will to help out. This is especially important if you have minor children; naming guardians for your minor children in your will does not help if you are incapacitated and unable to care for them. Check out our Protecting Your Children page to find out more about naming guardians for your minor children.
While having a will allows you to avoid having a court decide who gets what, a trust can generally protect you even further.
5 Benefits of a Living Trust
There are many benefits to a living trust, including these five:
- Avoiding the public, costly and time-consuming court processes at death (probate);
- Avoiding the same regarding incapacity (conservatorship or guardianship);
- Providing for spouses without disinheriting children;
- Saving estate taxes in some cases;
- Protecting inheritances for children and grandchildren from the courts, creditors, spouses, divorce proceedings, and irresponsible spending.
There are many types of assets which can be funded into your trust, such as real estate, bank accounts, investment accounts, and intellectual property rights. Others might include:
- Notes payable to you
- Life insurance – if you don’t have an irrevocable life insurance trust
- Business interests
- Oil and gas interests
- Personal effects – artwork, jewelry, collectibles, antiques
It’s important to work closely with your estate planning attorney to make certain that all of your wealth distributions go according to your wishes – and done so with the least amount of cost and time delay. Contact us today for more information about wills, trusts, and other financial planning issues and let us help you decide what’s best for your situation!