With so many different options available when it comes to creating a comprehensive estate plan, it can be difficult to choose the ones that are right for you. More and more often, individuals choose to utilize trusts as a way to preserve assets and ensure that as many assets as possible can be passed on to heirs. Trusts have a lot of advantages that can be very attractive to individuals of both modest and wealthy means. One of the most well-known advantages of a trust is that it will avoid the probate process after a person dies. That means less of the assets will risk being eaten up by costs associated with the probate process, and assets in the trust are often available to heirs much quicker than were those heirs to have to wait for those assets to pass through probate. However, it is a misconception that all trusts avoid probate, and it is important to remember that when choosing the right type of trust for you.
Trusts and Probate
There are two basic types of trusts that most people utilize: revocable and irrevocable. A revocable trust is more common as it can offer an individual more flexibility with the structure of the trust as well as the assets placed in the trust. As the name suggests, it can also be revoked. On the other hand, irrevocable trusts can rarely be revoked or modified after they have been created. Assets put into them are typically permanently in the control of that trust. The more rigid structure of irrevocable trusts makes them less common, but there are many situations where such a rigid structure can actually be beneficial to you. Both of these types of trusts are created by an individual during his or her lifetime, so they may be referred to as a living trust or inter vivos trust.
There is another type of trust known as a testamentary trust that falls outside of this category. Instead of being created by an individual during his or her lifetime, testamentary trusts are created by an individual’s Last Will and Testament. Inherently, this means the trust is part of the Will. A Will is required to go through the probate process, as are any of the assets attached to the Will that you wish to have placed in a testamentary trust. While that does not necessarily mean that the trust itself will be subject to the probate process, the assets you want to put into the trust created by your Will have to go through the probate process. Unfortunately, this can significantly decrease these assets. You may also be able to work with an experienced estate planning attorney to create a living trust that will put assets that it holds into a testamentary trust upon your death, which may help you avoid the probate process even for a testamentary trust when created in this way.
Estate planning is not always the most enjoyable topic. However, there are many important nuances to estate planning law that may seem unimportant but can actually have a significant impact on your estate. Working with your experienced estate planning attorney to explore the various options that might be available to you in order to choose the ones that will create a comprehensive estate plan that is effective for you and your loved ones is an important step in securing your assets and the financial well-being of both your estate and your heirs.