If you have finally made the decision to seek advice about making an estate plan, your family will likely thank you for your thoughtfulness. More than half of those in Colorado and across the country put off planning their estates until it is too late, leaving their families with confusion and sometimes resentment.
You may be among the many who wonder, “Do I need a trust, or is a will sufficient for my estate?” You may feel that your estate is too small to require a revocable living trust or that you can make the most efficient use of a will. However, even if you do have simple assets, there may be circumstances within your estate or among your heirs that may require a more sophisticated and complex estate planning tool.
Why might I benefit from a trust?
A living trust is different from a will in that the trust is the legal owner of your assets. In this way, those assets you fund to the trust do not have to go through probate. You may also use your trust to indicate the time and manner in which you want the trust’s assets to go to the beneficiaries. This could be a valuable tool for you if any of these circumstances exist:
- You intend to leave assets to minors, including life insurance policies. The trustee you appoint to manage your trust will oversee the assets and distribute them according to your expressed wishes.
- You have no spouse or heirs. Your trust can protect your assets from guardianship if you become ill and spare your beneficiaries a long, expensive probate.
- Your estate will exceed the federal estate tax exemption. This is especially helpful if you and your spouse both take advantage of the tax breaks by splitting your assets into two trusts.
- You are in your second marriage: A trust can ensure your assets go to your biological children and your spouse’s assets stay in his or her family.
- You do not want your estate to be part of public record. Probate is a public matter, but a trust remains confidential in most cases.
If you decide to establish a trust for one of these or other reasons, it is not enough to sign the documents. You must take the time to fund your assets to the trust, or the trust is worthless, and your assets will still go through probate. It is also important to revisit your trust from time to time to update its beneficiaries and assets. Your estate planning attorney can help you decide on the best plan for your situation.