The basics of estate planning

While no person likes to think of his or her own life ending, it is often the smart ones who prepare for the future and events that are out of their control. Your decision to create a specific estate plan can make all the difference in what you leave behind for your children or other family members. After you have worked so hard to get where you are and earn all that you have, you should have control over where it goes after you die. Understanding the basics of estate planning can help you determine what will work best for you.

Does everyone need a will?

While a will can be very beneficial to many people, it is not the only option when planning your estate. A will may allow you to control what happens are you are gone with your assets, and allows you to do the following:

  • Minimize the estate tax
  • Choose a guardian for any minor children
  • Choose your executor
  • Give to charity generously when you die

Any type of estate planning will also give you peace of mind and a sense of accomplishment. Wills are intended to transfer property that you own in your own name. If you have joint property or assets, such as retirement assets or proceeds from life insurance, they cannot be transferred through a will. In this and many other ways, it may benefit you to opt for a trust instead.

What is the purpose of a trust?

There are many different types of trusts, including insurance trusts, family trusts, purpose trusts and others. There is a different purpose for each type of trust, but each offers unique benefits that many are drawn to.

  • Protecting and managing assets
  • Controlling distributions to beneficiaries
  • Extending privacy with confidentiality
  • Increasing tax exemptions
  • Avoiding probate
  • Specific purpose to give to charity
  • Preserving benefits for disability
  • Saving on taxes
  • Avoiding arguments and disagreements about unfair treatment

What is the difference between a will and a trust?

A living trust goes into effect immediately after it is signed, while a will goes into effect after you die. Trusts can plan for your care if you are ill, disabled or unable to care for yourself at some point in your life. One of the biggest differences between a trust and a will is that a trust gives you more control regarding how and when your assets are given to beneficiaries.

The laws and rules governing estate planning may often be complicated and complex. If you are concerned about your assets and caring for your family after you are gone, visit with an attorney immediately.