During the beginning of the coronavirus pandemic, estate planning attorneys saw a massive influx of interest in establishing wills. However, establishing control over what happens to your assets beyond the grave is something that shouldn’t only be considered during a public health crisis. None of us can take our assets with us when we go, so therefore estate planning is an important aspect of any complete financial plan. However, establishing how assets will be transferred beyond the grave can be daunting. Not only do most of us shy away from thinking about this time in our lives, but the terminology and processes can seem overwhelming. This article will provide an overview of what wills and trusts are, how they differ, and which legal protection they can provide.

Wills

Although there are differences depending on which state you live in, a will generally serve the purpose of sending a final message to your loved ones and instructions for how your assets should be distributed.  However, one thing a will does not provide is protection from having to go through probate court and becoming public record. While instructions in a will are clearly laid out as to “who gets what” from your estate, the courts ultimately oversee the distribution of your assets, and they oftentimes charge high fees. Due to the courts’ involvement, records from any transfer of estate are also public record. In addition to a will, having a proper estate plan in place is the most effective way to avoid fees and ensure independence and security when transferring assets to the next generation.

Trusts

Establishing a fiduciary relationship that gives authority to a trustee to handle your assets is the best way to protect your assets from unnecessary court and attorney fees and clearly define how you wish to distribute your assets. This also allows you to relax knowing that your beneficiaries are taken care of and can mourn without the burden of making financial decisions. Although there are many types of trusts, revocable trusts are some of the most common. This type of trust involves the retitling of the grantor’s assets, which means the grantor has full rights to do whatever they wish with these assets as long as they are living. However, when the grantor passes, the revocable trust becomes irrevocable and is assigned a tax identification number. The irrevocable trust will then hold the title of the assets until distributed by a named trustee.

Many of these assets (except for pre-tax assets, such as IRAs) can then be passed on to the designated beneficiary tax-free once proper accounting measures have taken place. Most trustees can distribute the assets to the beneficiaries of the trust with the help of their tax preparer and financial advisor. For more complex asset types or instructions, the estate planning attorney of record will typically assist the trustee for a fee significantly lower than the court costs would have been, had there not been a revocable trust established.

If you are interested in establishing an estate plan that not only distributes your assets as you wish but protects your assets from unnecessary fees, please do not hesitate to contact our team. We would be happy to assist you in outlining your trust and accompanying you to an estate planning meeting with an attorney of your choice. When an estate plan comes into effect, we want your family to know they have a contact at our firm to handle financial matters so they can focus on healing from the loss of a loved one as a family.