Let’s briefly summarise the differences between having a will and not having and then the differences between having a trust versus a will.
When a person dies without leaving a will, the deceased assets go into probate. Here the court will appraise the property, financial portfolio and other assets and determine the amount of taxes owed the government.
These assets will be sold in order to pay for the taxes, creditors, if any, and legal and court fees. The remaining balance goes to the spouse and children or next of kin and is usually divided based on the inheritor’s relationship to the deceased.
This process can take from 4-6 months to years, depending on the complexities of the estate and is very costly, sometimes leaving the heirs nothing.
A will is the next step up the estate planning ladder. Although the will still goes to probate, you can determine who receives your assets. The process also is considerably shorter, usually from four to six months.
You can go online and get a do-it-yourself will, which is definitely better than nothing at all and is inexpensive. The main disadvantage, however, is the big tax bite that could still leave your family with little or nothing.
Also, if you do have creditors or taxes to pay and your heirs cannot pay them, then the house can be sold in order to cover the debt. If any funds are left over, then your will can designate who will be the heirs and at what percentage or amount.
A trust is the smartest estate vehicle you can use to know that your family will be fine long after you have moved on. The biggest advantage – there is no probate and no taxes! The process takes about 4 – 6 weeks instead of months and you determine who gets what.
A trustee, the person you select, will handle all the affairs pertaining to your estate and will make sure your wishes are carried out. There are also living trusts that you can implement while you’re still alive, as opposed to a will which cannot be administered until after your death.
The living trust can take care of your needs should you become incapacitated and can distribute your assets while you’re living and enjoying your family’s pleasure. The best part is the complete control you have over your assets.
Attention! We are not attorneys and we are not lawyers. We cannot represent customers, select legal forms, or give advice on rights or laws. The article provided is for information ONLY and is NOT a substitute for the advice of a lawyer.