When planning for the future, it is important to have a clear understanding of legal documents that dictate the management and distribution of your assets. Two common instruments for this purpose are wills and trusts.
While both serve similar purposes, they have distinct features that cater to different needs.
Wills
A will is a legal document that outlines your wishes regarding the distribution of your assets after you pass away. It appoints an executor to carry out these instructions. Wills are typically straightforward and suitable for individuals with relatively uncomplicated estates.
Flexibility in distribution
One prominent feature of a will is its flexibility. It allows you to specify how you want your executor to distribute your assets among your heirs, beneficiaries and charitable organizations.
Probate process
Be aware that wills must go through a process known as probate. This involves a court validating the will, ensuring it meets legal requirements, and overseeing the distribution of assets. Probate can be time-consuming and may involve legal fees, potentially delaying the distribution of assets. In the State of New York, only estates with a value of greater than $30,000 must go to probate.
Trusts
A trust is a legal arrangement where a designated person, known as the trustee, manages your assets on behalf of your beneficiaries. Trusts offer a higher level of control and can be more complex, making them suitable for individuals with larger estates or specific wishes.
Avoiding probate
One significant advantage of a trust is its ability to bypass the probate process entirely. This means your trustee can distribute your assets to your beneficiaries without court involvement, saving time and legal costs.
Privacy and control
Since trusts are not part of public record, the details of your assets and their distribution remain confidential. Additionally, trusts allow for detailed instructions on how and when a trustee distributes your assets, providing a higher degree of control.
Understanding the differences between wills and trusts empowers individuals to make informed decisions, ensuring the management of their legacy goes according to their wishes.