Posted on August 27th 2022

Will

Overview

A will is a document that directs the distribution of your assets after your death to your designated heirs and beneficiaries. It also can include your instructions for matters that require decisions after your death, such as the appointment of an executor of the will and guardians for minor children.It specifies your last wishes, such as who should acquire your assets or care for your minor children. A will must be signed and witnessed as required by state law. Its implementation requires a legal process. It must be filed with the probate court in your jurisdiction and carried out by your designated executor.

Unique benefit

Wills are less expensive to write and easier to implement, easy to create and doesn't require ongoing maintenance or changing title of assets.

Considerations

Your assets still need to go through probate court, which could mean delays or additional expenses. It must be filed with the probate court in your jurisdiction and carried out by your designated executor. The document is publicly available in the records of the probate court which oversees its execution and has jurisdiction over any disputes. A will takes effect upon death. In Nevada state with community property laws, varying and detailed rules enable a person to disinherit a spouse. or child.

Living trust

Overview

Trusts are legal arrangements that provide for the transfer of assets from their owner, called the grantor or trustor, to a trustee. They set the terms for the trustee’s management of the assets, for distributions to one or more designated beneficiaries, and for the ultimate disposition of the assets. The trustee is a fiduciary obligated to handle the trust assets in accordance with the terms of the trust document and solely in the best interests of the beneficiaries.

Unlike wills which take effect upon death, trusts become effective upon the transfer of assets to them. A “living trust” can be created during a grantor’s lifetime. Or a trust may be a “testamentary trust” created after death in accordance with directives in the decedent-grantor’s will. Trusts
are frequently used in estate planning to benefit, and provide for the distribution of assets to, the heirs of the grantor.

Specifies your last wishes, such as who should acquire your assets or care for your minor children, and also transfers your assets to a trust during your lifetime.

Unique Benefit

If properly maintained, should avoid probate court delays and expenses for your loved ones.

If the trust is irrevocable, and you have completely relinquished all ownership rights and the assets can be excluded from your taxable estate.

If a grantor transfers assets to an irrevocable trust for the benefit of third parties or purposes and has relinquished all control, rights, and benefits with respect to the assets, and jurisdictions, the courts usually treat the assets as beyond the reach of the grantor’s creditors.

Considerations

More time consuming to create than a will, because it requires you to transfer and maintain your assets in name of the trust. Establishing a trust to hold and distribute assets upon your death does not protect the assets from estate taxation if your estate's value exceeds the federal estate tax exemption, set at $12.06 million for an individual decedent in 2022.

Conclusion

It is important to establish an estate plan earlier rather than later in life. Careful use of wills, trusts, or both, can ensure your assets and possessions end up where you want them to go. If you have minor children, you need a will to designate their guardians. If the cost of establishing and maintaining a trust is reasonable in relation to your assets and goals, a trust generally can settle your estate more quickly than a will and can provide confidentiality for trust assets.

An irrevocable trust essentially transfers assets out of one's name, but these are more expensive to draw up and implement, require naming a trustee, and cannot be changed once in effect.

If you are part of an LGBTQ+ legally married couple, then estate planning will essentially be the same for you for married straight couples. However, estate planning for unmarried couples, LGBTQ+ or straight, is essential, especially for long-term partners. If you are in a partnership but not legally married and die intestate (without a will), your partner could find themselves fighting with family or others over the departed's assets. 

Making an estate plan a priority now can save money and time later and help your loved ones avoid potential financial hardship and conflicts.