Wills and trusts are both estate-planning tools that can help ensure your assets are protected and bequeathed to your heirs. However, the transfer process becomes more involved when passing wealth to a subsequent generation. We highly recommend consulting with a legal advisor since both of these are legal documents and there are a number of state-specific requirements and issues.
A will is a written document expressing a deceased person’s wishes, which could include any intent from naming guardians of minor children to distributing assets upon death. Trusts are generally active the day you create them, and a grantor may list the distribution of assets before their death, unlike a will. Unlike a trust, most wills (excluding those that fit within the “small estate” limit) go through probate and can also be contested.
Will
- It’s a legally enforceable document stating how you want your affairs handled and your assets distributed after you die
- Can include a directive of how you want your funeral or memorial managed
- Your estate becomes part of the public record, and anything left by a will typically goes through probate court
- Retirement accounts and life insurance policies that pass straight to beneficiaries don’t go through the probate process
- If you have minor-aged children at home, it’s important to have a will that appoints guardianship of your children
- A will allows you to disinherit a child or spouse under certain circumstances
- If you die without a will, a condition called intestate is enacted, and courts follow a set formula for how to divide your assets, which could result in actions that negatively impact a surviving spouse or child
- If your estate is worth less than $11.7 million, there’s no estate tax return required, and you won’t be charged an estate tax
Revocable Living Trust
- It’s called a living trust because it’s created and maintained while the owner/trustor is alive and is revocable because it may be changed during the life of the trustor
- It holds a fiduciary relationship in which you give another party authority to handle your assets for the benefit of a third party
- There generally aren’t court or attorney fees after the trust is established
- Your property can pass immediately and directly to your named beneficiaries, skipping the probate process
- The contents of the trust can rarely be challenged in court, and the contents of the trust are held private
- One isn’t better than another, but if any issue arises, a living trust will most likely override a will
- To be valid, a trust must identify the following: the trustor, the trustee, the successor trustee, and the trust beneficiaries
- When set up properly, trusts can reduce how much of an estate is taxed at the 40% rate
Nearly everyone should have a will, but not everyone needs a trust. For more clarification and to properly set up your estate so that your intentions are handled as you wish, contact our office at (540) 720-5656.
Adapted from Investopedia1
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.