It’s never too soon to start planning how you want your assets to be handled when you pass away. As you start looking into your estate planning options, you might see frequent references to wills and trusts, as these are two very popular tools to use. If you are not sure which one is right for you, take a look at the differences, and then talk to a Minneapolis estate planning lawyer with Metropolitan Law Group to draft a will, trust, or both.
What Is a Will?
A will is a document that states which beneficiaries will inherit your assets and is submitted to a probate judge for consideration. So, if you want your children to equally split your estate, or if you want a specific relative to inherit your house or car, you can write these instructions in your will and the probate judge will consider your intentions when determining how your estate will be distributed.
A will can be a useful tool for someone who wants to state their end of life intentions but does not have any business or real estate interests, minor children or family conflict. A will should be written to conform with Minnesota law so it is not invalidated. Clients who use a will as their primary estate planning tool also need to ensure they have named proper beneficiaries and payable on death designations for all of their accounts. This will prevent unnecessary probate court involvement of the estate.
What Is a Trust?
A trust is a private arrangement between the Settlor (estate owner) and the Trustee who manages the assets of the Trust for the benefit of the beneficiaries (who inherit the assets of the Estate). Similar to a will, a trust is also used to memorialize end of life intentions for your loved ones and your assets. However, unlike a will, a trust avoids probate court.
In addition, your trust can include instructions for how to manage assets once you pass away. For example, you can stipulate that your children only get your assets when they graduate from college. You can also designate ages and life stages when children may inherit and you can place restrictions or conditions on a child’s inheritance.
Note that trusts are considered more complex and costlier than wills to set up. However, one advantage is that they can skip probate, unlike wills. This lets your beneficiaries get access to your assets sooner than they would if you had a will.
Which One Is Right for You?
As you can see, wills and trusts both have pros and cons. The one that’s right for you depends on your estate planning goals. Generally, wills are considered easier and less expensive to create and maintain than trusts. But trusts have some tax advantages and do not need to go through probate, so many people find them worth the extra time and cost.
An estate planning lawyer can help determine which one is best for your situation. To find out the right choice for you, contact our Minneapolis law firm at 612-448-9653 to schedule a meeting with our estate planning attorneys.