When people think about estate planning, they usually think about a last will and testament as it’s typically portrayed in the media. However, a will isn’t your only option when it comes to planning your estate. These documents are excellent foundations for an estate plan, but if you want to create a comprehensive plan for the future of your estate, they shouldn’t be your only strategy. You need to incorporate other estate planning tools to create a reliable plan..
While no two estate plans can ever be exactly the same, there are general things you can consider to make sure that you are making good decisions for you and your family’s future. Wills and trusts are popular estate planning tools that work together to help testators achieve their estate planning goals.
A will is essentially a document that enables you to accomplish different estate planning tasks and objectives. It allows you to name your beneficiaries as well as the kinds of assets they should receive, nominate a guardian or guardians for your children, and appoint an executor to oversee estate administration after your death. A trust, on the other hand, appoints trustees who can responsibly hold a property or asset for the benefit of another. Trusts can be divided into two broad categories, namely, living and testamentary. Living trusts become active when all formalities of their creation have been satisfied and ample funding has been established for the particular trust. Testamentary trusts, on the other hand, only become active after the death of the settlor or the person who initiated or created the trust.
Many people choose to draft a will with the support of a trust or several trusts, as a will alone has it’s imitations. A will, for instance, only allows you to make immediate or direct gifts to beneficiary, which can be an issue when you have minor children to think about. Staggering an inheritance is also not an option with a will (at least not on its own), which is why trusts are usually established so that minor children can receive support from an estate and only receive their full inheritance once they reach a certain age.
