Estate planning is a complex process with many elements involved, some of which can be confusing. For instance, do you know the difference between a revocable trust and a will?
A will is simply a personal statement of intent that provides instructions for the court or executor on property and assets held in your name, as well as naming guardians for your children.
A trust is a separate legal entity that you create with the help of an attorney. It functions as an arrangement in which property is held by one person, called the trustee, for another person, called the beneficiary. A trust becomes effective immediately, whereas a will is only valid upon your death.
One major benefit of a trust is that it avoids probate, which is the legal process used to determine if a will is valid. For tax purposes, know that some of the costs in setting up a trust may be deductible, but the taxation of your estate will be the same whether you have a trust or a will.
A qualified financial professional can help you determine which one will work for your financial situation, or whether you need both. Because every situation is unique, seeking professional guidance on this topic is important. Please do not hesitate to reach out today for more information.