As you begin the estate planning process, you may think that you need to do little more than draft a will. Creating a will is simple and relatively affordable. Yet, wills must go through probate court, which could be challenging for your beneficiaries and costly for your estate. While you will still want to include one as part of your estate plan, it may make sense to hold most of your assets in a trust instead.
Trusts are private
Since wills pass through probate court, they become public record after they are proven. Anyone interested in reviewing yours, then, can go to the courthouse where it was filed and look it over. If you set up a trust, though, this will not happen. Trusts are private and only your beneficiaries will be able to view its provisions. This arrangement can be helpful if you must disinherit someone, or if you would prefer the contents of your estate to remain known only to your beneficiaries.
Trusts avoid probate
When setting up a trust, you will transfer any assets you put in it to its ownership. Yet, by naming yourself as its trustee, you can retain control of and earn income from these assets during your lifetime. Your trust is technically a separate legal entity from you, though, and it will remain living when you die. Your assets, then, will disburse to your beneficiaries outside of probate court, in the manner indicated in your trust document. This arrangement will save your beneficiaries time, since they will not need to schedule their lives around probate hearings. It will also save your estate money.
Trusts preserve your estate’s value
Trusts are more expensive to set up than wills are. You can create a will on your own for little money, or draft one with an attorney’s help at a reasonable price. Setting up a trust is more expensive, and you will also spend money maintaining it over time. Yet, because trusts avoid probate, they also avoid its associated fees. Your will, as part of your probate estate, could lose between 3% to 8% of its value due to these. So long as you can afford the expenses that come with a trust, you can use yours to preserve your estate’s value in the long run.