For most people, the number one estate planning goal is the distribution of their estate assets after they are gone. In an initial estate plan, a Last Will and Testament is usually used to accomplish this goal. At some point, however, you may decide to create a trust and use that to distribute your estate assets after your death. A Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains why you should still have a Will in your estate plan even if you are counting on a trust to distribute your assets.
Why Would I Use a Trust to Distribute My Assets?
A basic Last Will and Testament is sufficient to ensure that your assets are passed down to the beneficiaries of your choosing after you are gone; however, a basic Will does have limitations. For example, the terms of a Will only become relevant after your death, meaning they cannot help if you become incapacitated. In addition, a Will cannot stagger the distribution of a sizeable inheritance and a Will must go through probate, often causing a significant delay before beneficiaries receive their intended inheritance. Most importantly, for parents with minor children, you cannot gift assets to a minor child using a Will. An adult must be responsible for the inheritance of a minor child until the child is old enough to legally inherit from your estate. For these reasons, and many others, you may choose to use a trust as your primary distribution vehicle for your estate assets.
How Does a Trust Work?
A trust is al egal arrangement that allows a third party (the “Trustee”) to hold assets intended for the benefit of designated beneficiaries of the trust. A trust can be a living trust, meaning that the trust activates during your lifetime, or a testamentary trust, meaning the trust only becomes active after your death. As the creator of the trust, you decide who to appoint as the Trustee. In some cases, such as when the goal of the trust is incapacity planning, you might appoint yourself as the Trustee and a spouse or family member as the successor Trustee. If your primary goal is to protect the inheritance of a minor child, you might appoint a professional Trustee. As long as the terms are not impossible or illegal, you can create whatever terms you want when you create a trust, allowing you to do things such as stagger the distribution of an inheritance or retain a certain amount of control over how an inheritance is used.
Why Would I Still Need a Will If I Have a Trust?
A trust agreement offers numerous advantages over a basic Will when it comes to distributing estate assets; however, a trust should not completely replace the need for a Will. Instead, you should include what is known as a “Pour Over Will” in your estate plan when you are relying on a trust. As the name implies, a Pour Over Will effectively “pours over” any assets remaining in your estate at the time of your death to the trust that you established. For instance, if you recently purchased an asset and did not have time to transfer it into your trust or owned assets you forget to transfer into the trust, a Pour Over Will can transfer them into the trust for you after your death. By including a Pour Over Will in your estate plan, you ensure that all significant assets owned by you at the time of your death are distributed using your trust agreement. Along with the other benefits of trust distribution, this means that those assets will not have to go through probate, potentially holding up the distribution of much needed assets to your family and other beneficiaries.
Contact a Murfreesboro Estate Planning Attorney
If you have additional questions or concerns regarding estate planning, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-8989-1560 to schedule your free appointment.
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