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Estate Planning: If I have trust, why do I need a will?

2019-04-24 Finance No comment

If you spend a lot of time talking about estate planning, you may be wondering why you need a will if you have a trust. This is a common problem. Before we discuss the answer, let's review some of the basic differences between the two.

Most people are familiar with the will [or “wills and wills” are completely formal], but many people don’t really know what “trust” is. Think of the trust as a special box for your assets [bank accounts, stocks, houses, rental properties, etc.]. The person you specify to handle the box is called the “trustee”. This person is not an "executor." The executor is appointed in the will and, with the approval of the court, has power only after you die. Trustees usually do not need court approval and can handle things in your life. from

with from

 After you die. This is why it is sometimes called a "living" trust.

There are many differences between will and trust, but the most basic difference is:

  • Wills will only take effect after you die, but trusts can be effective throughout your life and after death.
  • The property given to a person based on the will must be distributed directly to them without any additional conditions. Property provided under the trust may be given directly or may be retained in the trust and supervised by the trustee. Can set trust from

    by from

     Will, but the result is still trust.

  • If you use a trust rather than a will, you are more likely to reduce the estate tax.
  • Trust allows you to better protect your heirs from creditors, divorce and other relatives [or stepfathers].
  • Property provided under the will must pass the probate court. This process is very expensive, time consuming, and very public in California. The trust does not need to pass the probate court, can maintain private affairs, avoid the cost of probate, and can quickly deal with the final affairs of the deceased.

For most people, having a trust is worth double the cost – by the way, this fee is usually much cheaper than the probate. Habits [though not required] name the same person as trustee and executor so that control of trust and non-trust assets is concentrated on one person.

So why do you need both? Even if you have a trust, you have a willingness to have a safety net. It is common for people to accidentally forget something in their trust. Family homes are a good example. People buy new homes, refinance existing homes, and forget to return the property to their trust upon completion. When this person dies, the house is not part of the trust, so "who gets it" is determined by the will. Ideally, the will stipulates that all assets are transferred to the trust fund. In this way, the final distribution of assets still follows the trust fund's plan. If there is no will, the State of New York will decide who will receive any assets that are not in the trust fund. It may or may not be the person you want to own the property.

A good heritage plan will always include a will, even if it has a trust. Whether you decide whether you have one or two, you should get the help of a lawyer. In the long run, owning a real estate plan usually leads to more costs and unintended consequences.

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