On February 21, 2014

While it might be hard for someone in Colorado to think about their demise, they will need to prepare for that eventuality through an estate plan, usually including a will or a trust, which helps provide for their beneficiaries. A will is legally binding and addresses the distribution of assets when a person dies. A trust is a group of assets, such as bank accounts, real estate and businesses, held on the behalf of the beneficiary. Assets must be transferred to the trust, and a trustee handles how those are distributed. A living trust is established while the founder is alive, and they determine who will later manage it and how funds will be divided.

People often don’t know whether a will or trust is best, especially if they are retiring. One professional thinks that a trust provides the owner with greater control and keeps assets out of probate, which can drain time and money. Trusts also keep financial matters private, while a will is public record. A trust is usually more flexible than a will and can accomplish specific purposes, such as establishing a scholarship or paying for a relative’s college degree. It often lets the holder exert more control over how assets are distributed after death.

However, in some cases, a will might be all that’s necessary as a trust can be costly to set up. Assets need to be transferred to the trust in order to be effective. If a trust needs to be changed, it is more time-consuming and complex.

A client might not know if they should set up a will, a trust or both. An estate planning lawyer might be able to help a client decide the best option for them.

Source: Forbes, “Wills vs. Trusts: What’s Best For Retirees?“, Thomas and Robert Fross, February 18, 2014

Categories: Estate Planning

Tags: , ,